Four of the world's
largest emerging economies,
namely Brazil, Russia, India and
China, make up the BRIC bloc
represent 40 percent of the world's
population, 15 percent of the global GDP
and are reckoned to be the next economic
powers.
BRIC, as an combined is likely to exceed the
US by 2018. The Brazilian economy will be larger
than Italy's by 2020 and India and Russia will
individually be larger than Spain, Canada or Italy. All
four will account for a third of the global economy measured
in purchasing power parity (PPP) and contribute
about 49 percent of global growth. They will
account for almost 50 percent of the global equity
markets by 2050.
A recent study of Goldman Sachs further
discloses that BRIC contributed 36.3 percent of
the world's GDP growth (in PPP) and made up
about a quarter of the global economy during
the first decade of the century.
In the next 10 years, the incomes of the
middle class in BRIC economies are likely to
grow further and hence the consumer spending
base is going to shift from rich countries towards
BRIC with startlingly changing patterns of
international trade. They will likely be buying
more hi-tech value added goods instead of typical
low quality consumer goods.
For instance, 70 percent of global car sales
growth is likely to come from the BRIC
economies, with China accounting for 42 percent
of this increase. In the last decade alone, the
number of people earning incomes greater than
$ 6,000 and less than $ 30,000 has seen
exponential growth, which has resulted in increasing standards
of living for the citizens of BRIC along with falling poverty
rates. Goldman Sachs predicts that China and India will be the
dominant global suppliers of manufactured goods and services
respectively, and Brazil and Russia will dominate the world's
raw materials market.
The following are the main factors that contributed to the
BRIC success story: macroeconomic stability, institutional
capacity, openness and education. Macroeconomic stability
reflects effective use of fiscal and monetary policies to ensure
economic growth with price stability.
Institutional capacity is linked to the input and output ratio.
More efficient institutions work with fewer resources but with
a high level of output, and low performers do the opposite.
Empirical studies suggest that the legal system, functioning
markets, health and education systems, financial institutions
and the government bureaucracy make up the definition of
'institutions'. Openness to trade and FDI refers to access to
imported inputs, new technology, larger markets, policies related

to import substitution and employment creation, export
promotion and generally favourable terms of trade liberalisation.
To match the BRIC growth rates, what should we be doing
if we want to improve the quality of life of our people? Well,
first we should revisit our economic governance framework.
The most important indicator of economic governance is the
way economic decisions are made. Pakistan's economy has
been a victim of poor quality decision making most of the time
because decisions are made for short term political gains, thus
the success stories recorded have been ephemeral in nature.
The situation is compounded further when the economy is
seeing a steep fall in both local as well as foreign direct
investment due to surging terrorism-related incidents, energy
shortfalls, political uncertainty and the increasing
cost of doing business. Sadly, our spending on
education is one of the lowest in the world and
socio-economic indicators, instead of improving,
are further deteriorating.
should be followed now. To achieve macroeconomic stability on the external front,
dependency on lending institutions must be
reduced steadily. How can we do that? Here is
the answer: we should try accelerating exports
and home remittances simultaneously and
provide a conducive environment for foreign
investment (the three main sources to earn foreign
currency and build foreign exchange reserves).
The higher the foreign exchange reserves in
hand, the less the chances are that we will
approach foreign lending institutions for help
and accept their pressure. Also, at the same time,
a deep cut in the imports of luxury items should
be considered to ease pressure on the Balance
of Payments and on our reserves.
On the domestic level, improvement in tax
collection and economic governance across the
economy, a deep cut in unnecessary government expenditures,
merit-based appointments at key posts, effective utilisation of
natural resources available such as the Thar coal reserves and
privatisation of public sector enterprises or improvement in
their efficiency are some tough decisions that the government
must take now.
The local entrepreneurship model should be encouraged
across the country and a better environment ought to be provided
for this purpose. To encourage transparency and the rule of law,
the discriminatory approach of 'show-me-the-face-and-I-showyou-the-rule' should be strongly discouraged by all the
stakeholders.
All the above can be achieved if both nation and government
have the vision and the will. It is true that the BRIC economies
have not used any rocket science to achieve such phenomenal
growth and Pakistan can also take advantage from their success
stories .The leadership should have a clear vision approach to
lay solid foundations for the economy.n

Lessons to
be learnt
from the
growth in
emerging
economies

02

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Vol: XXXXIV

CO

machineries, parts, and raw
materials on donors' terms and
conditions.
One such condition has been that
the aid, loans, and credit are administered by consultants who take a lion's
share as their fees. Actual receipts are much
less than the repayments of the so-called aid,
loans, and credit from the future earnings in
foreign exchange. This has been further punctuated
with free imports of whatsoever nature, at the cost of
local investment, production, and export. According to
Mr Dominique Strauss Kahn, the former
Managing Director of the IMF, globalisation
has led to a "lethal cocktail of high unemployment, strained social cohesion, and political
instability, which, in turn, has affected macroeconomic stability". In Pakistan, thus the 10
percent poorest in the country consume four
percent of the national cake while the richest 10
percent gobble up 27 percent of it.
According to a recent report of the Federal
Board of Revenue and World Bank, 57 percent
of the economy is untaxed. The country's total
revenue is about Rs1.5 trillion and if this 57
percent untaxed economy is taxed the total
revenues will be about Rs 2.5 trillion. This would
more than compensate the aids, loans, and credit
- Rs0.38 trillion - our country has been plagued
with since inception. The total debt of the country
has reached a unbelievable figure of Rs11 trillion
now as against Rs4.7 trillion four years ago in
2007 due to non-payment of loans.
In fact, now even the donor countries have started saying that
aid recipients such as Pakistan should rely, first, upon its own
resources. Such constructive criticism of our tax machinery is a
blessing in disguise for we must get our house in order to win back
our sovereignty and become masters of our own destiny. Thus
Pakistan has to rethink her strategy from foreign policy to economic
and social strategy. If all these resources are put together and
prudently employed, Pakistan will be free from reliance on the
donor countries and earn socio-politico economic freedom. This
will encourage investment, production, and export, creating employment for the masses and make them self-reliant. Access to
foreign countries through full utilisation of resources will lead to
increased competitiveness and, as such, access to the world markets
on its own merit. It is local access to the local economy and not
access to US aid and IMF programmes which will lead to selfreliance.
Pakistan thus must be guided by her own national interests in
following any policy originating from external factors. The former
World Bank President, Mr Wolfensohn supports this view; "searing
images of desperation, hopelessness and decline of people who
once had hope but will have it no more...We need local ownership
and local participation. In the present circumstances development
cannot be achieved by solely relying on United States and other
developed countries.
Local access to the local economy is the way forward to macroeconomic stability which will help the Pakistani economy. Local
access to our economy will create employment, provide the bread,
clothing, and shelter promised to the masses of Pakistan.n

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Pakistan's human resource is one of the best in the world
Moreover, Pakistani workers and managers are in demand all over
the world. Pakistani Entrepreneurs have also made their mark.
Pakistan's agriculture is one of the best in the world. Before
partition, the part now comprising Pakistan(The Punjab Province)
was considered the bread basket of the entire Indian sub-continent.
When the country was faced with one of the worst floods in its
history, Pakistan was remarkably still exporting surplus wheat and
rice. The demand for cotton was such that its prices increased by
more than 100 percent, more than most other commodities. All this
led to consumer demand. The result is overall improvement in the
economy and the retail business, in particular, has prospered with
the ever highest corporate results, as reported
to stock exchanges.
Pakistan is blessed with mines - oil, gas, coal,
copper, silver and gold. The mines have not been
explored but the reserves are so large that not
only can they meet the local requirements but
also provide a surplus for export.
Presently, the county has one of the highest
foreign exchange reserves - US$17.5 billion. The
country has the ever highest remittances - on an
average US$1 billion per month. The country
has surplus current accounts. Exports are expected
to be the highest ever, reaching about US$25
billion. Imports will rise to about US$35 billion
which is a matter of concern, particularly since
so much can and should be produced locally.
However, the reality is that Pakistan is
somehow obsessed with liberalisation, deregularisation, and privatisation - the mantra of the
developed world and US-influenced academics.
There are closed markets, such as the European Union and Nafta,
to name a few, which restrict free trade. The US itself becomes a
closed market whenever there is an excess of imports through
implementation of tariff protection, to say the least.
The world generally and Pakistan, in particular, is thus denied
access to the US and European market, among others. Pakistani
textile is made to wait entry to these markets, year after year.
On the other hand, there is a free flow of imports from all these
markets the world over - USA, European Union, China, etc generally
under-invoiced, if not smuggled, thus evading customs duty and
sales tax. India, on the other hand, is a classic example for Pakistan
to follow. Since the time of Nehru, the policy has been that whatever
is produced in India cannot be imported through imposition of tariff
or non-tariff barriers. It was only when India's economy became
globally competitive and produced export champions that Manmohan
Singh, as finance minister, started opening up the economy to the
world. Malaysia has also relied on her own resources and thus
refused to accept the IFI's support. It is another model country independent of the world powers - for Pakistan to follow.
Immediately, after partition Quaid-e-Azam Mohammad Ali
Jinnah found that Pakistan had no resource base, so he approached
USA for a helping hand. The US agreed but conditioned it with
regional cooperation - nay - regional camp follower so Pakistan's
subservience shifted from the UK to USA.
The aid, loans and credit that follow from IFIs under the influence
of America, has been a misnomer. The recipients and more so
Pakistan receive such aid, loans, and credit basically for commodities
and not for much needed socio-physical infrastructure with the
condition that the recipients will import their requirements of

Reliance on
local
investment
to develop
economy

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CO

is only in the form of an
indirect tax. The crop tax has
no co-relation to the crop price
and the law allows the 'abiana
payment' to be adjustable against income from agriculture, unlike Sales Tax
on goods and Federal Excise Duty which
is not adjustable against income tax on businesses. This just goes to prove that both horizontal
and vertical taxation between farm activity and nonagri business is based on an iniquitous or wicked practice.
The stated value on which real estate
transactions take place is less than 60 to
70 percent of the real sale value. Unless
the stamp duty plus other provincial levies
are lowered to one percent the property and
real estate transactions will continue to
remain understated.
Provinces must appreciate that their
share in the Federal Divisible Pool greatly
depends on FBR's success in effectively
bridging the tax gap by improving its
monitoring system and taking some other
required measures that are accompanied by
stricter enforcement. But they too need to
start making an effort in the same direction.
Tax broadening has to be a collective effort
- a national effort indeed.
Potential taxpayers in Pakistani society can only be identified through collection of transaction data and then crossmatching with the returns filed at all the three tiers of the
government. This requires creation of a common data bank
backed by laws which make it obligatory for those outside
the tax net to supply asset and transaction information with
regularity. This requires a handshake between the registrars'
office and various other sales points. We have created an
Inland Revenue Service in the FBR through integration and
harmonization of the income tax and sales tax administration
and laws. The present state of confusion or confused mass of
information owes its existence to our failure to train the field
formation and create a cohesive force. Income tax officers
are often found clueless about sales tax laws and vice-versa.
Customs service officers who have opted to the Inland Revenue
Service stick out like a sore thumb. Without continuous
training and an effective audit mechanism, the self-assessment
system remains declining.
This is specifically the reason that despite emphasis on
revenue collection, over the last few years, the tax-to-GDP
ratio instead of going up, has been going down. This explains
how economic interests of the landed aristocracy have dominance over constitutional rule whereas it should have been
the other way around.n

M

M

EN

T

Under the 7th National Finance Commission (NFC) Award,
the provinces had agreed to help the Federal Government in
increasing tax revenues to the tune of 15 percent of GDP by
the end of NFC Award period. To accomplish this target,
provinces were required to take necessary legal and administrative measures to effectively tax agriculture and property
sectors. Since there is little progress in this regard the transfer
to provinces from the divisible pool that was originally
predicted at Rs. 1,034 billion in the budget now stand reduced
to Rs. 993 billion.
Federal Ministry of Finance has, therefore,
urged the Prime Minister to hold a meeting
of the Council of Common Interests on an
urgent basis to start the taxation process from
the next financial year budget with a view to
achieving a 15 percent tax-to-GDP ratio by
2015-16.
On agriculture income there is no law on
tax collection. However, rules and procedures
are still needed to be framed under the law
by the provincial governments. Also, the basic
mechanism and appropriate policies to collect
this tax are still not in place. In the absence
of these fundamental prerequisites, provinces,
particularly Balochistan, continue to remain
dependent on the Federal Government on
account of meager collection. The provincial
governments are not levying or collecting tax
on agriculture income but charging a fixed rate per-acre - on
the basis of area and produce index unit for irrigated and nonirrigated regions. The charge is usually Rs. 150 per-acre from
the irrigated areas and Rs. 100 per-acre from non-irrigated
lands. Even the penalty for non-filing of tax returns on agri
income is nothing, i.e., Rs. 1,000. Defined in article 260(1)
acreage-based charge is in gross violation of the Constitution
that stipulates tax on agriculture income.
The political parties of Pakistan having vote bank in the
urban areas are not prepared to accept a value-added Sales
Tax (RGST) system; nor are the existing urban taxpayers
willing to accept any additional load of taxation unless tax
collection from agriculture income and real estate is subjected
to same treatment, as in the case of businesses and salaried
class. As a consequence, the Federal Government is now
caught between a rock and a hard place. Taxes that have
buoyancy such as: Capital Value Tax (CVT) on immovable
properties and sales tax on services are now with the provinces.
Other than Sindh, no province has made attempts, however
feeble, towards creating a desired capacity to collect sales tax
even from stand alone services. They are asking for help from
the centre to collect sales tax on services on their behalf (now
firmly with them after the 18th Amendment) against a collection fee.
The revenue collection system for the farm sector in place

Barriers to
financial
and
economic
growth

Vol: XXXXIV

www.iandm.com.pk

03

History of Saudi Arabia
Saudi Arabia traces its roots back to the earliest civilizations
of the Arabian Peninsula. Over the centuries, the peninsula has
played an important role in history as an ancient trade center
and as the birthplace of Islam, one of the world's major
monotheistic religions.
Since King Abdulaziz Al-Saud established the modern
Kingdom of Saudi Arabia in 1932, its transformation has been
astonishing. In a few short decades, the Kingdom has turned
itself from a desert nation to a modern, sophisticated state and
a major player on the international stage.

The Beginning of an Agricultural Society

The first concrete evidence of human presence in the Arabian
Peninsula dates back 15,000 to 20,000 years. Bands of huntergatherers roamed the land, living off wild animals and plants.
As the European ice cap melted during the last Ice Age, some
15,000 years ago, the climate in the peninsula became dry. Vast
plains once covered with lush grasslands gave way to scrubland
and deserts, and wild animals vanished. River systems also
disappeared, leaving in their wake the dry river beds (wadis)
that are found in the peninsula today.
This climate change forced humans to move into the lush
mountain valleys and oases.
No longer able to survive as hunter-gatherers, they had to
develop another means of survival. As a result, agriculture
developed - first in Mesopotamia some 8,000 years ago, then
the Nile River Valley, and eventually spreading across the entire

Vol: XXXXIV

The magnificent ancient Nabatean tombs at Madain Saleh are
a must-see for visitors

Middle East.
The development of agriculture brought other advances.
Pottery allowed farmers to store food. Animals, including goats,
cattle, sheep, horses and camels, were domesticated, and people
abandoned hunting.
These advances made intensive farming possible. In turn,
settlements became more permanent, leading to the foundations
of what we call civilization - language, writing, political systems,
art and architecture.

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05

at the moment - Babylon, Egypt, Persia,
Greece or Rome. In addition, the
peninsula's great expanse of desert formed
a natural barrier that protected it from
invasion by powerful neighbors.

The Birth of Islam

Archeological site in Al-Jouf

An Ancient Trade Center

Located between the two great centers
of civilization, the Nile River Valley and
Mesopotamia, the Arabian Peninsula was
the crossroads of the ancient world.
Trade was crucial to the area's
development; caravan routes became trade
arteries that made life possible in the
sparsely populated peninsula.
The people of the peninsula developed
a complex network of trade routes to
transport agricultural goods highly sought
after in Mesopotamia, the Nile Valley and
the Mediterranean Basin. These items
included almonds from Taif, dates from
the many oases, and aromatics such as
frankincense and myrrh from the Tihama
plain. Spices were also important trade
items. They were shipped across the
Arabian Sea from India and then
transported by caravan.
The huge caravans traveled from what
is now Oman and Yemen, along the great
trade routes running through Saudi
Arabia's Asir Province and then through
Makkah and Madinah, eventually arriving
at the urban centers of the north and west.
The people of the Arabian Peninsula
remained largely untouched by the political
turmoil in Mesopotamia, the Nile Valley
and the eastern Mediterranean. Their goods
and services were in great demand
regardless of which power was dominant

06

Around the year 610 AD, Muhammad,
a native of the thriving commercial center
of Makkah, received a message from God
(in Arabic, Allah) through the Angel
Gabriel. As more revelations bid him to
proclaim the oneness of God universally,
the Prophet Muhammad's following grew.
In 622 AD, learning of an assassination
plot against him, the Prophet led his
followersto the town of Yathrib, which
was later named Madinat Al-Nabi (City
of the Prophet) and now known simply as
Madinah.
This was the Hijrah, or migration,
which marks the beginning of the Islamic
calendar. Within the next few years, several
battles took place between the followers
of the Prophet Muhammad and the pagans
of Makkah. By 628 AD, when Madinah
was entirely in the hands of the Muslims,
the Prophet had unified the tribes so
successfully that he and his followers
reentered Makkah without bloodshed.

The Islamic Empire

Less than 100 years after the birth of
Islam, the Islamic Empire extended from
Spain to parts of India and China. Although
the political centers of power had moved
out of the Arabian Peninsula, trade
flourished in the area.

Modern mosque on the
Red Sea in Jeddah

www.iandm.pk

Also, a large number of pilgrims began
regularly visiting the peninsula, with some
settling in the two holy cities of Makkah
and Madinah. These pilgrims facilitated
the exchange of ideas and cultures between
the people of the peninsula and other
civilizations of the Arab and Muslim
worlds.
The emergence of Arabic as the
language of international learning was
another major factor in the cultural
development of the Arabian Peninsula.
The Muslim world became a center for
learning and scientific advances during
what is known as the ''Golden Age.''
Muslim scholars, such as physician
Ibn Sina and historian Ibn Khaldun, made
major contributions
in many fields, including medicine,
biology, philosophy, astronomy, arts and
literature.
Many of the ideas and methods
pioneered by Muslim scholars became the
foundation of modern sciences.
The Islamic Empire thrived well into
the 17th century, when it broke up into
smaller Muslim kingdoms. The Arabian
Peninsula gradually entered a period of
relative isolation, although Makkah and
Madinah remained the spiritual heart of
the Islamic world and continued to attract
pilgrims from many countries.

The First Saudi State

In the early 18th century, a Muslim
scholar and reformer named Shaikh
Muhammad bin Abdul-Wahhab began
advocating a return to the original form
of Islam. Abdul- Wahhab was initially
persecuted by local religious scholars and
leaders who viewed his teachings as a
threat to their power bases. He sought
protection in the town of Diriyah, which
was ruled by Muhammad ibn Saud.
Muhammad bin Abdul-Wahhab and
Muhammad bin Saud formed an
agreement to dedicate themselves to
restoring the pure teachings of Islam to
the Muslim community. In that spirit, Ibn
Saud established the First Saudi State,
which prospered under the spiritual
guidance of Abdul-Wahhab, known simply
as the Shaikh.
By 1788, the Saudi State ruled over

Vol: XXXXIV

SPECIAL REPORT
known as the Masmak Fortress. This
legendary event marks the beginning of
the formation of the modern Saudi state.
After establishing Riyadh as his
headquarters, Abdulaziz captured all of
the Hijaz, including Makkah and Madinah,
from 1924 to 1925. In the process, he
united warring tribes into one nation.
On September 23, 1932, the new
country was named the Kingdom of Saudi
Arabia, an Islamic state with Arabic as its
national language and the Holy Qur'an as
its constitution. The historic Masmak
Fortress in Riyadh holds a special
significance for Saudis

The historic Masmak Fortress in Riyadh holds a special significance for Saudis

the entire central plateau known as the
Najd. By the early 19th century, its rule
extended to most of the Arabian Peninsula,
including Makkah and Madinah.
The popularity and success of the AlSaud rulers aroused the suspicion of the
Ottoman Empire, the dominant power in
the Middle East and North Africa at the
time. In 1818, the Ottomans dispatched a
large expeditionary force armed with
modern artillery to the western region of
Arabia.
The Ottoman army besieged Diriyah,
which by now had grown into one of the
largest cities in the peninsula. Ottoman
forces leveled the city with field guns and
made it permanently uninhabitable by
ruining the wells and uprooting date palms.

The Second Saudi State

By 1824, the Al-Saud family had
regained political control of central Arabia.
The Saudi ruler Turki bin Abdullah AlSaud transferred his capital to Riyadh,
some 20 miles south of Diriyah, and
established the Second Saudi State. During
his 11-year rule, Turki succeeded in
retaking most of the lands lost to the
Ottomans. As he expanded his rule, he
took steps to ensure that his people enjoyed
rights, and he saw to their well-being.
Under Turki and his son, Faisal, the
Second Saudi State enjoyed a period of

46

peace and prosperity, and trade and
agriculture flourished. The calm was
shattered in 1865 by a renewed Ottoman
campaign to extend its Middle Eastern
empire into the Arabian Peninsula.
Ottoman armies captured parts of the Saudi
State, which was ruled at the time by
Faisal's son, Abdulrahman. With the
support of the Ottomans, the Al-Rashid
family of Hail made a concerted effort to
overthrow the Saudi State.
Faced with a much larger and better
equipped army, Abdulrahman bin Faisal
Al-Saud was forced to abandon his
struggle in 1891. He sought refuge with
the Bedouin tribes in the vast sand desert
of eastern Arabia known as the Rub' AlKhali, or 'Empty Quarter.' From there,
Abdulrahman and his family traveled to
Kuwait, where they stayed until 1902.
With him was his young son Abdulaziz,
who was already making his mark as a
natural leader and a brave warrior.

The Modern Kingdom of Saudi
Arabia

The young Abdulaziz was determined
to regain his patrimony from the Al-Rashid
family, which had taken over Riyadh and
established a governor and garrison there.
In 1902, Abdulaziz - accompanied by only
40 followers - staged a daring night march
into Riyadh to retake the city garrison,

www.iandm.com.pk

King Abdulaziz (1932-1953)

The legendary King Abdulaziz, also
known in the West as ''Ibn Saud,'' was a
remarkable leader of imagination and
vision who set the new Kingdom of Saudi
Arabia on the road to modernization.
During his rule, King Abdulaziz started
building the country's infrastructure. He
established roads and basic
communications systems, introduced
modern technology, and improved
education, health care and agriculture.
Although King Abdulaziz never
traveled beyond the Arab world, he was
a highly sophisticated statesman. Foreign
leaders and diplomats who met with him
came away impressed by his integrity and

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SPECIAL REPORT
honesty. He was famous for dispensing
with diplomatic niceties in favor of frank
discussion. He was just as well known for
keeping his promises, whether given to a
Bedouin or to a world leader. These
qualities enhanced his stature as a reliable
and responsible leader dedicated to peace
and justice.

(OIC), a group of 56 Islamic countries
that promotes Islamic unity and
cooperation. Throughout the turbulent
period of the 1960s and 1970s, which
included two Arab- Israeli wars and the
oil crisis of 1973, King Faisal was a voice
for moderation, peace and stability. He
was assassinated March 25, 1975.

Abdulaziz's eldest
son Saud acceded to
the throne upon his
father's death in 1953.
Hecontinued King
Abdulaziz's legacy,
creating the Council
of Ministers and
establishing
theMinistries of Health, Education
andCommerce.
One of King Saud's greatest successes
was the development of education. Under
his rule many schools were established,
including the Kingdom's first institute of
higher education, King Saud University,
in 1957. King Saud also made his mark
globally. In 1957, he became the first
Saudi monarch to visit the United States.
In 1962 he sponsored an international
Islamic conference that would become the
Muslim World League, headquartered in
Makkah.

King Khalid (1975-1982)

King Saud (1953-1964)

King Faisal (1964-1975)

King Faisal bin
Abdulaziz was a
visionary innovator
with a great respect
for tradition.He
initiated the first of a
series of economic
and
social
development plans
that would transform
Saudi Arabia's infrastructure, especially
industry, and set the Kingdom on a path
of rapid growth. King Faisal also
established the first public schools for
girls in the Kingdom.
In foreign policy, King Faisal showed
a firm commitment to the Islamic world.
He was a central force behind the
establishment in Jeddah in 1971 of the
Organization of the Islamic Conference

46

Khalid
bin
Abdulaziz succeeded
King Faisal in 1975.
King Khalid also
e m p h a s i z e d
development, and his
reign was marked by an
almost explosive
growth in the country's
physical infrastructure. It was a period of
enormous wealth and prosperity for Saudi
Arabia.
On the international stage, King Khalid
was a prime mover in forming the Gulf
Cooperation Council (GCC) in 1981,
which promotes economic and security
cooperation among its six member
countries:
Bahrain, Kuwait, Oman, Qatar, the
United Arab Emirates and Saudi Arabia.
King Khalid bin Abdulaziz Al-Saud

King Fahd (1982-2005)

Under King Fahd
bin Abdulaziz, who
adopted the title
Custodian of the
Two Holy Mosques,
Saudi Arabia
continued its
tremendous
socioeconomic
development and
emerged as a leading political and
economic force.
King Fahd was central to Saudi
Arabia's efforts to diversify its economy
and promote private enterprise and
investment. He restructured the Saudi
government and approved the first
nationwide municipal elections, which
took place in 2005.
One of King Fahd's greatest
accomplishments in Saudi Arabia was a

www.iandm.com.pk

series of projects to expand the Kingdom's
facilities to accommodate the millions of
pilgrims who come to the country each
year. These projects involved major
expansions of Islam's two holiest sites,
the Holy Mosque in Makkah and the
Prophet's Mosque in Madinah, as well as
airports and seaports.
In the international arena, King Fahd
worked actively to resolve regional and
global crises. These crises included the
Israeli-Palestinian conflict, Iraq's invasion
of Kuwait, the Lebanese civil war in
addition to conflicts in BosniaHerzegovina, Kosovo, Chechnya,
Afghanistan, Somalia and Kashmir.
As Crown Prince in 1981, he proposed
an eight-point plan to resolve the ArabIsraeli conflict and give the Palestinians
an independent state. The plan was
considered one of the first attempts to find
a just and lasting settlement that took into
consideration the needs of both the Arabs
and Israel. It was unanimously adopted
by the Arab League at a summit in Fez,
Morocco in 1982.
Perhaps the greatest international crisis
of King Fahd's rule occurred when Iraq
invaded Kuwait on August 2, 1990. The
King played a key role in putting together
the international coalition that drove Iraqi
forces out of Kuwait.
King Fahd was also concerned with
humanitarian issues. Under his rule, Saudi
Arabia provided humanitarian aid to
numerous countries, including Somalia,
Bosnia and Afghanistan, as well as
countries suffering from natural disasters,
such as earthquakes (Turkey in 1999, Iran
in 2003) and the Southeast Asian tsunami
in 2004.

King Abdullah (2005 - )

Custodian of the Two Holy Mosques
King Abdullah bin Abdulaziz acceded to
the throne after the death of King Fahd
on August 1, 2005. He is also Commander
of the National Guard, a position he has
held since 1962.
King Abdullah was born in Riyadh in
1924, and received his early education at
the royal court. Influenced by his father
King Abdulaziz, he developed a profound
respect for religion, history and Arab

Vol: XXXXIV

SPECIAL REPORT
extremism on numerous occasions over
the years. In 1997, he warned of the
dangers of militancy in an address to the
11th Organization of the Islamic
Conference (OIC) summit in Tehran. At
the International Counterterrorism
Conference in Riyadh in February 2005,
he called for greater international
cooperation to fight terrorism.

Crown Prince Sultan bin
Abdulaziz

heritage. His years spent living in the
desert with
Bedouin tribes taught him their values
of honor, simplicity, generosity and
bravery, and instilled in him the desire to
assist in the development of his people.
King Abdullah's first official visit to
the United States was in 1976 when, as
prince, he met with President Gerald Ford.
Since then, he has made a number of visits
to the United States, including visits to
President George W. Bush's ranch in
Crawford, Texas in 2002 and 2005.
As Crown Prince, he also traveled
widely in the Kingdom and inaugurated
a number of projects throughout the
country. In 2005 he closely monitored the
election process for the country's municipal
councils.
His international diplomacy reflects
Saudi Arabia's leadership role in defense
of Arab and Islamic issues and for the
achievement of world peace, stability and
security.
Peace in the Middle East and the plight
of the Palestinians are of particular concern
to King Abdullah. His proposal for a
comprehensive Arab-Israeli peace,
presented at the Beirut Arab Summit in
2002, has been adopted by the League of
Arab States and is known as the Arab
Peace Initiative.
King Abdullah has been unwavering
in his condemnation of terrorism and
46

When he became King in August 2005,
Custodian of the Two Holy Mosques King
Abdullah appointed his brother Prince
Sultan bin Abdulaziz as Crown Prince.
Crown Prince Sultan is also Minister of
Defense and Aviation and the InspectorGeneral.
Prince Sultan was born in Riyadh in
1928, and, like his brothers, received his
early education in religion, modern culture
and diplomacy at the royal court. After
serving as Governor of Riyadh Province
from 1947 to 1953, he became the
Kingdom's first Minister of Agriculture.
In 1955, he became Minister of
Communications, and contributed greatly
to the development of the Kingdom's road,
rail and telecommunications networks. He
has been Minister of Defense and Aviation
since 1963.
Prince Sultan serves as chairman of a
number of organizations, including the
National Commission for Wildlife

Crown Prince Sultan bin Abdulaziz

Conservation and Development
(NCWCD), the Saudi Arabian Railways
Organization (SRO) and the Prince Sultan
bin Abdulaziz Charity Foundation.
He has made a number of official visits
overseas, and led the Saudi delegation to
the 40th, 50th and 60th sessions of the
UN General Assembly in 1985, 1995 and
2005. During official visits to the United
States in October 1995, February 1997,
and November 1999 Prince Sultan met
with President Bill Clinton.

GOVERNMENT

The Kingdom of Saudi Arabia is a
monarchy with a political system based

King Abdullah presides over the Council of Ministers, also called the Cabinet

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SPECIAL REPORT
The King ensures that Islamic law
(Shari'ah) is applied. All government
officials, agencies and the ministers are
responsible to the King. The King appoints
the Crown Prince, who assists him in his
duties. The Crown Prince is also the
country's deputy prime minister.
The current head of state is King
Abdullah bin Abdulaziz. He is known as
the Custodian of the Two Holy Mosques.
The current Crown Prince is Sultan bin
Abdulaziz, who is also the Kingdom's
Minister of Defense and Aviation, and
Inspector-General.

Council of Ministers

in Islam. Its rules and regulations are
governed by the Holy Qur'an and the
teachings and sayings of the Prophet
Muhammad, known as the Sunnah, which
call for peace, justice, equality,
consultation, and respect for individual
rights.
There are 22 government ministries.
The country is divided into 13 provinces,
with a governor and deputy governor in
each one.

Executive

The Saudi head of state and the head
of government is the King, who is also
the country's prime minister and
commander-in-chief of the armed forces.

The Council of Ministers, also called
the Cabinet, advises the King and
facilitates the country's development. It
represents 22 different government
ministries and meets every week. The
Cabinet is presided over by the King or
his deputy. Established in 1953 by King
Saud, the Cabinet was restructured by
King Fahd in 1993.
The Cabinet consists of the Prime
Minister (the King), the Deputy Prime
Minister (the Crown Prince, who currently
is also a Minister with portfolio), 21 other
ministers with portfolio and seven
ministers of state.
It is responsible for drafting and
overseeing implementation of the internal,
external,, economic, education and defense
policies as well as the general affairs of

The seat of the Saudi parliament, the Majlis Al-Shura (Consultative Council)

46

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the State.
The Cabinet is the final authority for
financial, executive and administrative
matters. Its resolutions are non-binding
unless agreed upon by a majority vote. In
case of a tie, the prime minister casts the
tie-breaking vote. It functions in
accordance with the Basic System of
Governance and is advised by the Majlis

Majlis Al-Shura (Consultative
Council)

The Majlis al-Shura, or Consultative
Council, is a legislative body that advises
the King on issues that are important to
Saudi Arabia. It is a modern version of a
traditional Islamic concept - an accessible
leader consulting with learned and
experienced citizens - which has always
been practiced by Saudi rulers.
The Consultative Council currently
consists of 150 members appointed by the
King for a four-year renewable term.
Based on their experience, members are
assigned to committees. There are 12
committees that deal with human rights,
education, culture, information, health and
social affairs, services and public utilities,
foreign affairs, security, administration,
Islamic affairs, economy and industry, and
finance.
Originally restricted to discussion of
regulations and issues of national and

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SPECIAL REPORT

Members of the Majlis Al-Shura are appointed by the King
for four-year terms

public interest, the mandate of Majlis Al-Shura was broadened
in 2004 to include proposing new legislation and amending
existing laws without prior submission to the King. It has always
been able to request that government officials participate in key
meetings and apply for access to government documents.
On April 7, 2003 the Majlis Al-Shura became a full member
of the Inter-Parliamentary Union (IPU).

Provincial System

Saudi Arabia is divided into 13 provinces. Each province
has a governor, a deputy governor, and a provincial council.
These councils deliberate on the needs of their province,
work on the development budget, consider future development
plans, and monitor ongoing projects. The governor and deputy
governor of each province serve as chairman and vice-chairman
of their respective provincial council.
Each council consists of at least ten private citizens. As with
the Majlis Al-Shura, members of the council participate in
committees that focus on various issues of interest to the province.
The councils issue reports that are submitted to the Minister of
the Interior, and then passed on to the appropriate government
ministries and agencies for consideration.
The provincial council system is the result of bylaws
established by King Fahd in 1992. These bylaws divided the
country into 13 provinces and defined their administrative
structure, how they would be administered, and the responsibilities
of the governors and other regional officers. In 1993, King Fahd
named 210 members to the provincial councils.
In 2005, municipal elections were held for half of the members
of each of the 178 municipal councils in the Kingdom. The
remaining half of the council members and the mayor are
appointed.

court of appeal and as a source of pardon.
The Saudi court system consists of three main parts. The
largest is the Shari'ah Courts, which hear most cases in the Saudi
legal system. The Shari'ah courts are organized into several
categories: Courts of the
First Instance (Summary and General Courts), Courts of
Cassation and the Supreme Judicial Council.
Supplementing the Shari'ah courts is the Board of Grievances,
which hears cases that involve the government. The third part
of the Saudi court system consists of various committees within
government ministries that address specific disputes, such as
labor issues. In April 2005, a royal order approved in principle
a plan to reorganize the judicial system. The reorganization
includes the establishment of specialized courts as well as a
Supreme Court.

Shari'ah (Islamic Law)

Shari'ah refers to the body of Islamic law. It serves as a
guideline for all legal matters in Saudi Arabia. In the Shari'ah,
and therefore in Saudi Arabia, there is no difference between
the sacred and the secular aspects of society.
Muslims derive Shari'ah law primarily from the Holy Qur'an
and secondarily from the Sunnah, the practices and sayings of
the Prophet Muhammad during his lifetime. The third source is
Ijma', the consensus of opinion of Muslim scholars on the
principles involved in a specific case occurring after the death
of the Prophet. Qias, analogy, is the fourth source of law.
Shari'ah presumes that a defendant is innocent until proven
guilty, and only in serious crimes or in cases of repeat offenders
is one likely to witness severe punishments.n
source: www.saudiembassy.net
Clock tower in Riyadh's historic
Qasr Al-Hokm district

JUDICIAL SYSTEM

Since Saudi Arabia is an Islamic state, its judicial system is
based on Islamic law (Shari'ah) for both criminal and civil cases.
At the top of the legal system is the King, who acts as the final

46

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Vol: XXXXIV

Saudi Arabia
Economy & Infrastructure
Saudi Arabia's free market economy has undergone remarkable
changes in a relatively short period of time. It has evolved from
a basic agricultural society into a regional and global economic
power with a modern infrastructure.
Petroleum is an integral part of the Saudi economy; Saudi
Arabia is the world's largest producer and exporter of oil. In
recent decades the Kingdom has increasingly diversified its
economy, and today produces and exports a variety of industrial
goods all over the globe.
The government has an essential role in industrial and
economic development. The Ministry of Economy and Planning
formulates economic and social development plans that set longterm economic goals. Additional sectors of the economy are
overseen by individual ministries, such as agriculture, petroleum,
transportation, communications and finance.
The private sector is playing an increasingly larger role in
the Saudi economy - it now accounts for 48 percent of the gross
domestic product (GDP). The sector is expected to continue
growing, especially as Saudi Arabia opens its doors further to
foreign investment.
The Kingdom's oil fields, such as this one at Shaybah, produce
high-grade crude
In December 2005, Saudi Arabia joined the World Trade
Organization (WTO), a significant development that gives Saudi
products greater access to global markets, creates jobs and
encourages foreign investment.

Saud.
The discovery of oil in commercial quantities in 1938 changed
that. Soon after World War II, steady oil exports provided the
funds to build a basic infrastructure of roads, airports, seaports,
schools and hospitals.
In 1970, Saudi Arabia introduced the first of a series of
ongoing five-year development plans to build a modern economy
capable of producing consumer and industrial goods that
previously had been imported. The country's infrastructure was
expanded, allowing industry and commerce to flourish.
At the same time, the national oil company, Saudi Aramco,
invested in new production and shipping facilities, pipelines,
and plants. Aramco also continued exploring for new deposits
to maximize earnings from the oil sector, which were needed to
fund further growth.
The result has been a steady economic transformation of the
country. Today, Saudi Arabia is one of the fastest developing
nations in the world.
The KingdomÂ&#x2019;s oil fields,
such as this one at Shaybah,
produce high-grade crude

BUILDING A MODERN ECONOMY
When the modern Kingdom was established in 1932, the
Arabian Peninsula was an agricultural society that depended on
farming and commerce - especially date exports and trade
generated by pilgrims coming to Makkah and Madinah. It lacked
the infrastructure needed to support the kind of economic growth
envisioned by its founder, King Abdulaziz bin Abdulrahman Al12

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Vol: XXXXIV

ENERGY SECTOR

The energy sector is the backbone of
the Saudi economy. The Kingdom
possesses a quarter of the world's proven
oil reserves, and is the world's largest
producer and exporter of oil.
Saudi Arabia is also developing its
additional energy resources - natural gas
that once flared off oil wells is collected
and used, and the Kingdom has become
a producer of refined oil products and
petrochemicals such as kerosene, diesel
oil and gasoline.
Saudi Arabia has taken steps to expand
the energy sector and encourage greater
investment, especially by foreign
companies. In May 2000, the Supreme
Council for Petroleum and Minerals
(SCPM) - which oversees the
maximization of natural resources announced a decision to allow foreign
investment in the gas sector and
downstream industries.

Oil

The story of Saudi Arabian oil goes
back to 1933 when King Abdulaziz
granted Standard Oil of California (Socal),
later renamed Chevron, the right to
prospect for oil in the new Kingdom.
In 1938, Socal discovered large
quantities of oil in the Dammam Dome
near the Arabian Gulf. Limited exports
began in 1939, and picked up significantly
with the end of World War II. In the late
1940s, Socal entered into a consortium
with other American oil companies and
was renamed the Arabian American Oil
Company (Aramco). By the 1970s, Saudi
Arabia had become the top producer and
exporter of oil in the world.
The Saudi oil industry entered a new
era in 1980 when the government assumed
full ownership of Aramco, renaming it
Saudi Aramco. The company began
exploring in areas that had previously
been untouched, and discovered vast
deposits of high-grade crude oil. Saudi
Arabia continues to find new fields - such
as one discovered 175 miles southeast of
Riyadh on April 20, 2005.

Ensuring Stability of Global
Markets

Vol: XXXXIV

Saudi Arabia has proven oil reserves
of more than 260 billion barrels. Most are
located in the Eastern Province, including
the largest onshore field in Ghawar and
the largest offshore field at Safaniya in
the Arabian Gulf.
As the world's largest producer and
exporter of oil, Saudi Arabia plays a unique
role inb the global energy industry. Its
policies on the production and export of
oil, natural gas and petroleum products
have a major impact on the energy market,
as well as the globaleconomy as a whole.
Mindful of this responsibility, Saudi
Arabia is committed to ensuring stability
of supplies and prices. The Kingdom has
repeatedly acted in times of crisis - such
as the Gulf Crisis of 1990-1991, the 2003
Iraq war and market fluctuations of the
late 1990s - and covered any drop in oil
supplies by increasing its output. In this
way, Saudi Arabia has prevented major
shocks to the global economy from a loss
of supply orsharp price increases.
Saudi Arabia's oil production varies
according to the state of the market and
guidelines set by the Organization of
Petroleum Exporting Countries (OPEC).
OPEC unifies petroleum policies among
its members and ensures stability in
international oil markets by eliminating
fluctuations in prices.
As a founding member of OPEC and
its largest producer, Saudi Arabia has a
leading role in guiding the organization
to promote cooperation in energy issues,
often acting as OPEC's principal
moderating force.

diesel oil, liquefied petroleum gas, jet fuel,
kerosene and other petroleum products
for the domestic market and for export.
Considered among the most
technologically advanced in the world,
these refineries have an output of around
nine million barrels per day of petroleum
products, most for export. The Kingdom
continues to invest in its refineries. In May
2005, Saudi Aramco announced plans for
new refineries in Jubail and Yanbu with
an anticipated capacity of 800,000
barrels per day of petroleum products.
Saudi Arabia has entered downstream
operations in other countries, including
South Korea, the Philippines, Greece,
India, and China. Motiva, a joint venture
between Shell Oil Company and Saudi
Refining Inc., refines, distributes, and
markets oil products inthe United States.
Motiva is planning to more than double
the capacity of its Port Arthur, Texas
refinery from 235,000 to 600,000 barrels
per day, making it the largest in the United
States.

Saudi Arabia possesses vast reserves
of natural gas - dissolved, associated and
non associated - which it uses as an
environmentally friendly energy source
for urban and industrial use. Major
industrial facilities use gas as feedstock
to produce petrochemicals, fertilizers, steel
and other products that in turn feed a
thriving industrial sector.
Until the 1970s, most of the natural
gas produced in the Kingdom was in
association with crude oil production and
was flared off at the well. An ambitious
project known as the Master Gas System

13

The Haradh-3
natural gas
processing plant
southwest of
Dhahran

equal half of the total output.
The Saudi Electric Company (SEC)
manages existing power generation,
distribution and delivery facilities, as well
as investment in new general plants.
Wholly owned by shareholders, the SEC
also sets the price of electricity sold to
consumers and industry under rules set
by a governing body based on the cost of
production, distribution and services.
Saudi Arabia has also begun working
with GCC countries to link their national
power grids. Ultimately, plans include
linking the GCC grid with the rest of the
Arab world and Europe through Turkey
and Syria.

Alternative Energy Sources

allowed Saudi Aramco to collect the gas
and pipe it around the country. Exploration
of the Kingdom's natural gas resources
remains ongoing.
Major deposits have been discovered
in the Eastern Province near Abqaiq in
2003 and southwest of the Ghawar oil
field. Saudi Arabia also actively promotes
foreign investment in natural gas. In July
2003 an agreement was signed with Royal
Dutch/Shell and France's Total and China's
Sinopec to develop upstream gas
operations in the Empty Quarter (Rub' alKhali). In March 2005, additional contracts
were signed for two vast oil and gas
projects.

desalination process. The Kingdom
generates more than 26,300 MW of
electricity, 2,800 MW of which is produced
by the desalination plants. Saudi Arabia
eventually plans to increase the electricity
produced by these desalination plants to

Saudi Arabia is also looking at
alternative energy sources, including solar
energy. The Kingdom receives some of
the most intense sunlight in the world 105 trillion kilowatt hours a day, which
is roughly the equivalent of 10 billion
barrels of crude oil in energy terms.
Scientists at the King Abdulaziz City for
Science and Technology (KACST) are
working on groundbreaking projects to
make solar power generation more
economically feasible.

A DIVERSIFIED ECONOMY

Electricity Network

Saudi Arabia has a massive electricity
distribution network that extends to cities,
towns and villages across the country. Its
network consists of 8,750 miles of
transmission lines, 52,000 miles of
distribution lines and over 53,000 miles
of service connections.
The Kingdom also uses desalination
plants to generate electricity using the
steam that is a byproduct of the

14

Saudi Arabia exports food items such as fruits, vegetables and dairy
products, as well as flowers
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Vol: XXXXIV

Dates have traditionally been
a Saudi staple

While Saudi Arabia's economic base
continues to be dominated by oil, the
Kingdom has taken steps to diversify the
economy. Today, industrial products make
up more than 90 percent of the Kingdom's
non-oil exports. Saudi Arabia exports
petrochemicals, plastics, metal goods,
construction materials and electrical
appliances to some 90 countries.
As part of Saudi Arabia's
diversification efforts, industrial cities
have been built in major urban centers.
The Jubail Industrial City on the Arabian
Gulf has dozens of factories and industrial
facilities, including a desalination plant,
a seaport, a vocational training institute
and a college. The Yanbu Industrial City
on the Red Sea has a modern port,
refineries, a petrochemical complex and
manufacturing and support enterprises.
The government offers incentives for
the establishment of private companies at
the industrial cities. The Saudi Arabian
Basic Industries Corporation (SABIC),
created in 1976, set up non-oil industrial
facilities that use as feedstock natural gas
and natural gas liquids manufactured by
the oil industry.
One of the most ambitious economic
projects to date is the massive King
Abdullah Economic City near Jeddah,
which broke ground in December 2005.
The residential and commercial
megaproject will include a dedicated port,
an industrial park, a residential and hotel
complex, and educational facilities. It is
the largest joint venture in the Kingdom.
Other similar projects are planned,
including the Prince Abdulaziz bin Musaed
Economic City in Hail and Al-Madinah
Economic City in Madinah.
In addition, Saudi Arabia has extensive

Vol: XXXXIV

deposits of minerals. They include gold,
silver, copper, tin, tungsten, nickel,
chrome, zinc, lead, phosphates, iron ore,
bauxite, potassium ore and even table salt.
The Kingdom is encouraging greater
private sector involvement in the mining
sector, and Saudi Arabia expects to become
a major exporter of minerals in the coming
decades.
Saudi Arabia exports food items such
as fruits, vegetables and dairy products,
as well as flowers

AGRICULTURE

Saudi Arabia's agricultural
development over the last three decades
has been astonishing. Large areas of desert
have been turned into agricultural fields
- a major accomplishment in a country
that receives an average of about four
inches of rain a year, one of the lowest
rates in the world.
Historically, agriculture in the Arabian
Peninsula was limited mostly to date
farming and small-scale vegetable
production in widely scattered oases,
except in a small coastal strip in the
southwest. Small plots produced enough
food for the local communities, and any
extra was sold to passing caravans.
Serious agricultural development
began in the 1970s. The government
launched an extensive program to promote
modern farming technology; to establish
rural roads, irrigation networks and storage

and export facilities; and to encourage
agricultural research and training
institutions. As a result, there has been a
phenomenal growth in the production of
all basic foods.
Saudi Arabia is now completely selfsufficient in a number of foodstuffs,
including meat, milk and eggs. In fact,
Saudi Arabia now exports wheat, dates,
dairy products, eggs, fish, poultry, fruits,
vegetables and flowers to markets around
the world. Dates, once a staple of the Saudi
diet, are now mainly grown for global
humanitarian aid.
The Ministry of Agriculture is
primarily responsible for agricultural
policy. Other government agencies include
the Saudi Arabian Agricultural Bank
(SAAB), which disburses subsidies and
grants interest-free loans; and the Grain
Silos and Flourmills Organization, which
purchases and stores wheat, constructs
flourmills, and produces animal feed. The
government also offers land distribution
and reclamation programs and funds
research projects.
The private sector has played a major
role in the Kingdom's agricultural
development. This is mostly due to
government programs that offers longterm, interest-free loans, technical and
support services, and incentives such as
free seeds and fertilizers, low cost water,
fuel and electricity, and duty-free imports
of raw materials and machinery.
A network of dams
captures runoff from
rain for use in
agriculture

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15

WATER

Saudi Arabia is a desert country with
no permanent rivers or lakes and very
little rainfall. Water is scarce and extremely
valuable, and with the country's rapid
growth, the demand for water is increasing.
The Kingdom, therefore, has turned to
innovative ways to provide enough water
to support its development
Aquifers, vast underground reservoirs
of water, are a major source of water in
Saudi Arabia. In the 1970s, the government
undertook a major effort to locate and
map aquifers and estimate their capacity.
As a result, it was able to drill tens of
thousands of deep tube wells in the most
promising areas for both urban and
agricultural use.
Another major source of water is the
sea. This conversion is done through
desalination, a process that produces
potable water from brackish seawater.
Saudi Arabia is the world's largest producer
of desalinated water. The Saline Water
Conversion Corporation (SWCC) operates
27 desalination stations that produce more
than three million cubic meters a day of
potable water. These plants provide more
than 70 percent of the water used in cities,
as well as a sizeable portion of the needs
of industry. They are also a major source
of electric power generation.
Dams are used to capture surface water
after frequent flash floods. More than 200
dams collect an estimated 16 billion cubic

King Khalid International Airport in Riyadh

feet of runoff annually in their reservoirs.
Some of the largest of these dams are
located in the Wadi Jizan, Wadi Fatima,
Wadi Bisha and Najran. This water is used
primarily for agriculture and is distributed
through thousands of miles of irrigation
canals and ditches to vast tracts of fertile
land that were previously fallow.
An expanding source of water is the
use of recycled water. The Kingdom aims
to recycle as much as 40 percent of the
water used for domestic purposes in urban
areas. To this end, recycling plants have
been built in Riyadh, Jeddah and other
major urban industrial centers. Recycled

Desalination plants such as this one in Yanbu are an important
source of water

16

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water is used for irrigation of farm fields
and urban parks.
Desalination plants such as this one in
Yanbu are an important source of water

TRANSPORTATION

At the time of the establishment of the
modern Kingdom of Saudi Arabia in 1932,
the country lacked modern transportation
facilities and ports, and had less than
30miles of paved roads. Today, the
Kingdom is served by a modern
transportation network of roads, railroads,
air, marine and public transport.
Saudi Arabia has a comprehensive road
network that comprises some 100,000
miles of roads. Perhaps the most
spectacular is the King Fahd Causeway,
which links Saudi Arabia to Bahrain. At
15.5 miles, it is the second longest
causeway in the world, an engineering
masterpiece that spans both water and
reclaimed land. Under consideration is a
second causeway linking Saudi Arabia
and Egypt.
The Kingdom currently has three
international airports: King Khalid
International in Riyadh, King Fahd
International in Dammam and the King
Abdulaziz International Airport in Jeddah.
There are also 24 regional and local
airports. Plans are underway to convert
the Prince Muhammad bin Abdulaziz
Airport in Madinah into an international

Vol: XXXXIV

airport.
The national airline, Saudi Arabian
Airlines (SAA), started out in 1945 with
the gift of a single twin-engine DC-3
Dakota from President Franklin D.
Roosevelt. It now has a fleet of some 140
aircraft, and carries around 15 million
passengers each year.
Saudi Arabia has 21 large, modern
ports that facilitate industrial development,
and a new deep-water port is under
construction at the King Abdulaziz
Economic City near Jeddah. Saudi ports
move some two million twenty-foot
equivalent units (TEUs) annually.
Around 12,000 ships visit Saudi ports
each year, totaling one ship every 30
minutes. There are over 220 berths at
Saudi ports. They are operated by the
Saudi Ports Authority, which supplies
equipment and building piers.
Maintenance is provided mostly by private
companies.
More than half of the Kingdom's sea
traffic passes through the Islamic Port of
Jeddah, one of the main ports in the Middle
East and an entry point for pilgrims. New
port facilities at Yanbu Industrial City on
the Red Sea have eased Jeddah's load and
improved the efficiency of petrochemical
exports. Other major ports are located in
Dammam, Jizan and Jubail.
Saudi Arabia's rail network is managed
by the Saudi Railway Organization (SRO).
The network consists of the 449-mile

Dammam-Riyadh line that includes stops
in Hofuf and Abqaiq. A second, 556-mile
Dammam-Riyadh line travels via Haradh,
on the edge of the Empty Quarter.
There are plans to extend the railway
to the Jubail Industrial City on its eastern
end and, eventually, to Makkah, Jeddah
and Madinah on its western side. Yet
another extension would link Riyadh to
the mining areas in the north. This
expansion is being carried out by the
private sector.
The Saudi bus network provides
affordable public transport both within
and between the Kingdom's cities.
Operated by the Saudi Public Transport
Company (SAPTCO), the fleet of over
2,000 buses carries more than 3 million
passengers each year. There are also 10
international routes that are used by nearly
half million travelers each year. SAPTCO
operates special bus service during the
hajj, the annual pilgrimage to Saudi
Arabia's holy sites.

COMMUNICATIONS

Saudi Arabia's telecommunications
sector is growing at a rapid rate. Facilities
and services are constantly expanded to
accommodate the growing market.
The Ministry of Telecommunications
and Information Technology oversees all
modern communications technologies in
the Kingdom. The major provider in Saudi
Arabia is the partially privatized Saudi

The King Fahd Causeway links Saudi Arabia with
the island of Bahrain

Vol: XXXXIV

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Telecommunications Company (STC),
one of the largest telecom services
operators in the world. A second company,
Mobily, also provides mobile phone
service.
The Kingdom's landline telephone
system is modern and efficient, using
extensive microwave radio relay, coaxial
cable, and fiber-optic cable systems. In
2000, 2.9 million lines were available,
and Saudi Telecom is expanding its
network to 4 million lines. Seven standard
earth stations link up with the Intelsat
Satellite System.
Mobile phones are extremely popular
in Saudi Arabia. In 2002, there were more
than 5 million mobile phones in use in the
Kingdom. Saudi Arabia's mobile
telephones operate on the Global System
for Mobile Communications (GSM), one
of the leading digital cellular systems used
all over the world.
Internet usage is growing rapidly in
Saudi Arabia. More and more lines are
being provisioned for Internet access to
accommodate increasing demand,
including high-speed service such as DSL.
According to a 2003 Zogby poll, nearly
two-thirds of Saudis have Internet access.
The Communications and Information
Technology Commission (CITC)
supervises all operations of the Kingdom's
Internet sector. CITC also helps Saudi
families own personal computers and
access the Internet through the Saudi
Home Computing Initiative.
Saudi Arabia also sends satellites into
space. In 2006 alone, the Kingdom plans
to launch six Saudi-built satellites for
communication and observation. The King
Fahd Satellite Communications City in
Jeddah is the largest complex of its kind
in the Middle East.
The King Fahd City is also the ground
station for Arabsat, the leading
communication satellite in the Arab world.
The second Arabsat satellite was launched
on June 17, 1985 with the help of Saudi
Payload Specialist Prince Sultan bin
Salman - the first Arab and Muslim to
travel to space - during his mission on the
US space shuttle Discovery.

17

trade zones that Saudi Arabia has undertaken with several
neighboring countries.

The Globe Restaurant at the Faisaliyah Commercial
Center with panoramic views of Riyadh

BANKING AND FINANCE

COMMERCE

The Globe Restaurant at the Faisaliyah Commercial Center
with panoramic views of Riyadh
Saudi Arabia's commercial sector is growing rapidly. This
is mainly due to generous government incentives such as the
provision of long-term interest-free loans and support services
and facilities. In addition, chambers of commerce and industry
in the major cities and regions promote commercial ventures.
There are currently some 10,000 firms, mostly joint stock
companies, involved in commercial activities in the Kingdom.
Their total invested capital is estimated to be more than $45
billion.
The sector is overseen by the Saudi Arabian General
Investment Authority (SAGIA),which offers private entrepreneurs
free consulting and support services and publishes lists of
investment opportunities. In November 2005, SAGIA announced
plans to open offices abroad, including in China, the United
States, the United Kingdom and Germany to attract investment
in infrastructure projects.
The role of the private sector in commerce is substantial private companies account for some 48 percent of the nation's
GDP of $248.82 billion. They manufacture, distribute and sell
domestic products.
Private companies also handle most imports of consumer
and industrial goods and the bulk of the exports of non-oil
products. Saudi Arabia is among the top 20 export and import
markets in the world, and exports of non-oil products to some
90 countries average around $6 billion per year.
Foreign investment is also growing in the Kingdom. Investors
from all over the world are joining Saudi partners to set up
ventures, attracted by the Kingdom's political, economic and
social stability, modern infrastructure, inexpensive energy supplies
and strategic geographic location.
The Kingdom's foreign investment rules make it attractive
for foreign investors to invest in the Kingdom by introducing
a new law giving them the right to the same benefits, incentives
and guarantees offered to Saudi individuals and companies. It
also allows foreign investors to own property and real estate.
The future of the commercial sector is promising. Saudi
Arabia's membership in the WTO will boost commercial activity
and provide Saudi products with more opportunities in global
markets. Another positive development is the formation of free-

18

Saudi Arabia has a modern banking industry with 13
commercial banks. Saudi banks provide retail and corporate
banking, investment services, brokerage facilities, and derivative
transactions in addition to credit cards, ATMs and point-of-sale
transactions.
There are also banks in the Kingdom that provide Islamic
banking services. Islamic banking is a system of banking that
is consistent with the principles of Islamic law (Shari'ah). It
prohibits usury, the collection and payment of interest, trading
in financial risk and investing in companies considered un Islami
Saudi Arabia also has a thriving stock market. The total value
of shares traded annually is some SR 60 billion [US $16 billion].
The Tadawul All-Share Index (TASI) of the Saudi stock market
is one of the most highly capitalized stock exchanges in the Arab
world. TASI was also one of the first exchanges globally to set
up a full electronic clearing and settlement system with immediate
transfer of ownership.
The banking and finance sector is overseen by several
government agencies. The Ministry of Finance supervises
economic policies. The Saudi Arabian Monetary Agency (SAMA)
manages fiscal policy, issues the country's currency, the Saudi
Riyal ,and oversees the nation's commercial banks.
The government has also established five specialized credit
institutions to provide loans to citizens for development projects
in agriculture, industry and construction - the Saudi Industrial
Development Fund (SIDF), the Saudi Arabian Agricultural Bank
(SAAB), the Real Estate Development Fund, the Public
Investment Fund and the Saudi Credit Bank.n
source: www.saudiembassy.net

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SAMBA (the former
Saudi-American
Bank) in Jeddah

Vol: XXXXIV

Gas flares fire the night at Saudi Aramco's Ras Tanurah refinery,
north of Dhahran, Saudi Arabia. Each day sparkling towers here
produce more than half a million barrels of refined petroleum, the
largest output of any refinery in the Middle East.

The first three decades of the past twentieth century witnessed
a number of attempts to explore the petroleum and mineral
resources of what is known today as the Kingdom of Saudi
Arabia. These efforts, which took place in today's Jaizan Region
and the Eastern Province, did not produce any results. Ion May
29, 1933, however, the government of Saudi Arabia granted a
concession to Standard Oil of California (then SOCAL, and
today's Chevron), to explore for and produce oil in an area of
495,900 square miles in the eastern parts of the Kingdom. This
concession evolved through the past 75 years to become the
company we know today as the Saudi Arabian Oil Company ,
or Saudi Aramco; the world's number one petroleum company.
After five years of meticulous and somewhat disappointing
exploration work which took place near Jabal Dhahran over a
geological structure named the Dammam Dome, oil was
discovered in commercial quantities for the first time in 1938
in Dammam Well No. 7 in an a geological substrata known as
the Arab Formation. Many years later, the Custodian of the Two
Holy Mosques; King 'Abd Allah ibn 'Abd al-'Aziz befittingly
re-named the well No. 7 'Prosperity Well'

24

In May 1939, the first Saudi oil shipment to the international
market was exported from the newly constructed Ras Tanura
Port on the Arabian Gulf, in a Royal ceremony attended by HM
the late King 'Abd al-'Aziz..
Today, the number of discoveries reached 110 fields; the
majority of which are oil fields while some are oil and gas, gas
only or condensates fields. Many of Saudi Arabia's hydrocarbon
resources fields are located in the Eastern Province, on-shore
and off-shore. The rest are located south of the capital city
Riyadh in the central parts of the Kingdom, and in the coastal
plains and under the waters of the Red Sea in the western parts
of the Kingdom.
The Kingdom ranks the world's first in oil reserves, production
and exports. Its proven oil reserves by the end of 2006 amounted
to approximately259.9 billion barrels, constituting about 25%
of the world's total oil reserves. The Kingdom's oil production
averaged 8,9 million barrels per day (bpd) in 2006, or about
11% of world production, and the volume of its oil exports in
the same year reached about 7 million barrels per day, or about
11% of world oil exports.
In addition to its proven reliability to meet any customer's

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SPECIAL REPORT
needs which is supported by its reserves
and production and export capacity, Saudi
Arabia's oil comes in ifive different grades:
Arabian heavy, Arabian Medium, Arabian
light, Arabian Extra light and Arabian
Super light. The crude oil and its products
are exported via the ports of Ras Tanura
and Ju'aymah on the Arabian Gulf and
Yanbu' on the Red Sea.

Background about Saudi Gas

Until the late 1970's, most of the
associated gas produced with oil was
flared. During that decade, however, the
Saudi Government developed a plan to
utilize this gas to provide fuel and
feedstock to the Kingdom's growing
industries. Accordingly, Aramco was
instructed to design, build and operate
what we now know as the Master Gas
System. At the time of its construction,
the Master Gas System was the world's
largest project ever carried out by a single
company. This vast network of gas
collecting facilities and processing and
fractionation plants became the backbone
of the industrial development in Saudi
Arabia and made Saudi Aramco the
world's largest exporter of Liquefied
Petroleum Gas.
However, the past two decades
witnessed significant growth in Saudi
Arabia and as a result demand on gas grew
in rates that are considered among the
highest in the world.
The Saudi Petroleum industry,
represented by Saudi Aramco, responded
to this national need by launching a
comprehensive and aggressive gas
program that is based on increasing the
capacity of the Master Gas System's
current facilities, expanding Saudi
Aramco's gas exploration program to find
more non-associated gas, building new
gas facilities mainly to handle the newly
discovered non-associated gas and
expanding the gas pipeline network and
supplies to reach Riyadh and Yanbu'.
As a result of these efforts, the
Kingdom's reserves of non-associated gas
increased during the past decade from
about 45 trillion cubic feet in 1993 to
about 95 trillion cubic feet in 2003, and
bringing the total gas reserves of the

46

Kingdom, in 2006, to about 248.5 trillion
cubic feet, the fourth largest of the world.
Moreover the natural gas production
capacity of the Master Gas System
increased from approximately 3 billion
cubic feet per day to about 7.5 billion
cubic feet per day, in the same period.
Mega gas projects that Saudi Aramco
completed recently such as Hawiyyah and
Haradh Gas Plants, made natural gas
available across the Kingdom to meet
growing demand in the industry and public
utilities such as power generation and
waterdesalination.
Saudi Aramco also contributed to the
development of the Saudi gas through its
involvement in the Government-launched
National Gas Initiative which was
culminated by signing four joint-venture
agreements that included Shell, Total,
Luke oil, SINOPEC, Repsol, Eni and of
course Saudi Aramco.
Moreover, PetroRabigh; Saudi Aramco
is joint venture with Somitumu Chemical
in Rabigh is considered a quality move in
the Saudi petroleum industry because it
makes use of Saudi Aramco's distinguished
capabilities and expertise and those of its
partner; Somitumu Chemical, to expand
the economic base of the Kingdom and
offer a promising investment opportunities
for the national economy and the private
sector.
Saudi gas operations also produce
natural gas liquids (NGL), part of which
is used domestically for household
consumption and as a petrochemical feed
stock while the rest is exported to world
markets. In 2006 the total volume of NGL
Production is over 399 million barrels, of
which more than 285 million barrels were
exported to the international markets.

Petroleum Policy and Economy

Saudi Arabia is considered to be the
world's leading petroleum country in terms
of reserves, production, exports and
refining capacity. The Kingdom owns one
quarter of the world reserves, 13 percent
of world production, more than 20 percent
of petroleum sales in international markets
and a refining capacity of more than 3.5
million barrels per day (MMBD).
Saudi Arabia 's proven and recoverable

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reserves are estimated at about 260 billion
barrels. This does not include possible
reserves or reserves that currently are not
recoverable with available technologies.
These are conservatively estimated at
approximately 100 billion barrels. The
method the Kingdom uses to estimate
reserves is consistent with the definitions
and methods adopted by reputable
professional agencies such as the Society
of Petroleum Engineers, the International
Petroleum Congress and the American
Society of Petroleum Geologists.
Additionally, the Kingdom is believed to
have undiscovered petroleum resources
that are conservatively estimated at 200
billion barrels.
Underscoring the immensity of the
Kingdom's reserves is the fact that with a
production rate of 9.5 MMBD the reserves
could last for approximately 80 years,
based on proven reserves alone. Production
could continue for more than 100 years if
probable and possible reserves are taken
into consideration.
The undiscovered resources also could
add many additional decades of use. For
examble, during 2004 and up-to mid 2005,
six new oil and gas fields were discovered
in the Kingdom's Central and Eastern
regions, including ash-ShuÂ&#x2019;aybah, Abu
Sidr, Medrikah, DuÂ&#x2019;ayban, Halfa and
Fazran fields.
The Kingdom's production estimated
at about 12% percent of world production,
is not in proportion with the its reserves
that constitute 25 percent of world
reserves. In other words, the reserve
volume to annual production ratio is 87
folds, while the same ratio is
approximately 10 folds in some other
major producing nations, such as the
United States , Canada , the United
Kingdom and Norway .
In the coming years, it is expected that
the Kingdom's production will increase
due to rapidly rising world oil demand.
Research centers and international
organizations forecasts indicate an annual
growth of 1.6 percent in oil demand which
translates to 1.5 MMBD. Additionally,
two other factors will cause an increase
in the Kingdom's share in international
oil markets. First is the dwindling
production output from major countries

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SPECIAL REPORT

and production zones such as the U.S. and the North Sea . Second
is that the diminishing chances to discover an alternative to oil
during at the coming two decades due to the high economic cost
and the inefficiency of current alternative fuels. To counter the
expected increase due to these factors, the Kingdom completed
the development project for Qatif and Abu Sa?fah fields that
produce a total of 800 MBD. This mega project, completed
ahead of schedule, will boost the Kingdom's total production
capacity from 10.5 MMBD to 11 MMBD.
The Kingdom recently started planning to gradually increase
its production capacity to 12.5 MMBD by 2010. Work already
started on numerous upgrades to both old and new fields.
Reservoirs and fields have already been identified for capacity
increases. The investment in raising production capacity reflects
Saudi Arabia 's expectation that the demand for Saudi oil will
continue for many years. It also reflects the Kingdom's desire
to maintain a reasonable spare capacity of at least 1.5 MMBD.
As happened many times in the past, such spare capacity helped
to stabilize the oil market by pumping more oil during supply
shortages or unexpected high demand. Over the long term, the
possibility of raising production capacity to 15 MMBD has been
considered, and may be implemented if world consumption
requires it.

It also seeks to stabilize the market and avoid severe demand
and prices fluctuations. The Kingdom also wants to maintain
prices at reasonable levels that serve the interests of both
producing and consuming nations alike. This balance will
contribute to the growth of the international economy, especially
within developing countries, and generate adequate returns for
the international oil industry so it can invest in the exploration
and production of oil in order to meet the world growing demand.
The inescapable fact is that OPEC countries cannot control
prices. OPEC's role is limited to cooperating towards achieving
balance between demand and supply in the crude oil market.
Indeed, prices are affected by several factors, such as conditions
in the petroleum products markets (gasoline and heating oil, for
example) as in the U.S., Japan and the EU; political situations
in some producing countries; the tendency of speculators and
investment funds to either invest or not to invest in crude oil;
winter temperatures, etc.
One of the main roles of the Kingdom and other OPEC
producing nations to stabilize the oil market is maintaining a
cushion of spare production capacity. Such very expensive
unused production capacity is considered essential in avoiding
major crises resulting from supply shortages.
A key aspect of Saudi petroleum policy is establishing a
close cooperation with oil-producing and consuming countries.
The Kingdom pursues close ties with most of the world's countries
through official visits, trade, investments, exchange of information
and views, and coordination of policies. The Kingdom is also
an active member of several international oil and energy
organizations and forums, including, most importantly OPEC
of which the Kingdom is a founding member.
In the Arab world, the Kingdom is also a founding member
of the Organization of Arab Petroleum Exporting Countries
(OAPEC), which seeks to establish coordination and cooperation
among its member countries in regard to petroleum issues,
including joint Arab petroleum projects. The Kingdom also
coordinates its petroleum policies with the Gulf Cooperation
Council (GCC) countries, and has close and regular petroleum
cooperation with Russia , Norway , Mexico , and other oil
producing countries.

The Kingdom's petroleum policy is in line with the government
moderate and balanced approach that considers the interests of
all involved parties and balances the present with the future.
The Kingdom's moderate approach emphasizes cooperation,
peace, economic development and prosperity for all the world.
The Kingdom's petroleum policy seeks to stabilize the
international oil market by balancing supply and demand
depending on its huge reserves, high production capacity, and
spare production capacity that enable the Kingdom to meet the
world demand during the different seasons.
In cooperation with OPEC (the Organization of Petroleum
Exporting Countries ) and non-OPEC producers, the Kingdom
seeks to provide the market with adequate quantities of crude
oil, while avoiding oversupply that could cause prices to plummet.
46

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SPECIAL REPORT
The Kingdom also keeps close ties
with consuming nations. In addition to
mutual cooperation at all levels with most
of the major oil consuming nations such
as the US, Japan, EU, Korea, China and
India, the Kingdom plays an active role
within the International Energy Forum
(IEF). IEF comprises more than 50 major
oil-producing and consuming nations and
various petroleum organizations, whose
ministers and representatives meet once
every two years..
IEF activities began in 1991 and has
continued to grow every year. In 2000,
IEF's Seventh Ministerial Conference,
held in Riyadh , was inaugurated by the
Custodian of the Two Holy Mosques; King
Abdallah Ibn Abd al-Aziz of Saudi Arabia
(then Crown Prince), In his opening
speech, He proposed that a secretariat
general be established to maintain effective
cooperation between oil-producing and consuming nations. He added that the
Kingdom was ready and willing to host
the Secretariat in Riyadh and provide all
the necessary facilities for it to achieve
its objectives. \
Within three years of the proposal, the
Kingdom, with the help of several
producing and consuming nations, was
able to turn the idea into reality, and the
Secretariat started its activities in Riyadh
in 2003. Since then, the Secretariat has
made several important achievements.
The most significant being shouldering
the responsibility for the Joint Oil Data
Initiative (JODI), which is considered one
of the most important steps ever taken to
contribute to the stability, transparency
and cooperation among the world's
producing and consuming nations. The
IEF and its Secretariat are expected to
have a vital constructive role in the
international petroleum arena in the
coming years. This will serve the interests
of all parties and contribute to the growth
of the global economy.
In addition to the above, the Kingdom
has close ties with international energy
organizations such as the International
Energy Agency (IEA), which includes in
its membership the world's major industrial
energy-consuming nations.
Saudi Arabia believes in and seeks to
achieve continuous international
46

production cooperation that helps foster
a constructive environment for dialogue
with the objective to stabilize the
international oil markets, highlight the
importance of oil and enable the Kingdom
to play its role as a reliable source of
energy the world can depend on for its
prosperity and economic growth.

Saudi Arabia's Oil Industry

The Kingdom of Saudi Arabia, being
the world's largest oil producer and
exporter and having the world's largest
oil reserves was able to build an efficient
and effective petroleum industry that
operates on solid commercial and
technical principles vital to continuing
success. The Kingdom succeeded in
achieving this by taking four specific steps:
First: Developing and Qualifying
Saudi Citizens. Saudi Arabia 's petroleum
industry closely focuses on its personnel.
This starts with enrolling distinguished
Saudi high school graduates in technical
training programs unmatched in the world.
The most promising recruits are sent on
scholarship for academic study in a
specializations that will benefit the
industry. After graduation, they are
assigned to appropriate positions and given
financial and morale incentives with
continuation of their on-job training.
Through this program, the Kingdom
was able to build superior technical
workforces comparable in quality to
counterparts in the developed countries
and the international oil companies. An
excellent example is the efficiency
demonstrated by personnel in the Saudi
oil industry after the Iraqi invasion of
Kuwait in 1990. In the span of four
months, the Kingdom managed to boost
its production, without any external
assistance, by 3.0 MMBD. In early 1991,
the Kingdom also managed to control the
largest oil spill in history in the Arabian
Gulf 's waters. Today, approximately 87
percent of Saudi Aramco's personnel are
Saudis. The remaining 13 percent are
employees from more than 65 countries.
Second: Focusing on Petroleumrelated, and Generally Energy-related,
Technologies. Saudi universities, research
centers such as the King ?Abd al-?Aziz

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City for Science and Technology
(KACST), and petroleum and
petrochemical companies play an
important role in this field. Focusing on
science and technology includes both
theoretical and applied aspects. For
example, Saudi Aramco is the world's
largest oil company in the use of
communications and information
technology to track production and
transportation of about 9 MMBD of crude
oil and over 7 billion standard cubic feet
per day (BSCFD) of natural gas. This
includes monitoring oil fields and wells,
oil gathering centers, gas oil separation
plants (GOSP's), refineries, pipelines,
shipping and distribution facilities,
electricity generation facilities, and sales
offices worldwide.
Saudi Aramco employs the best and
most advanced technologies in the areas
of exploration, drilling, oil production and
field monitoring. The company's Research
and Development Center (R&DC)
employs more than 400 employees
including about 300 researchers working
on different projects. The R&DC was
established with the purpose of developing
technologies, increasing productivity and
finding unique solutions to support the
petroleum industry operations. As a result,
the center has won 25 internationallyregistered patents, as well as 150 other
potential patents that are in various stages
of research and registration.
Third: Effective Management.
Successful petroleum industry can not be
achieved without creative, qualified and
flexible management. This issue is given
utmost importance through continuous
training and development and specialized
managerial programs. In addition,
managerial personnel have the opportunity
to gain more scientific and professional
experience by moving and working in
various departments within the Kingdom
and abroad; participating in international
events by attending and delivering
speeches in conferences and forums; and
through professional exchanges with
similar agencies and companies.
Fourth: Establishing a Productive and
Effective Working Relationship among
the Government and the Petroleum
Companies Working in the Kingdom. The

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SPECIAL REPORT
Government fully trusts such companies
and abstains from interfering with their
daily operations, such as exploration,
operation, maintenance, sales, purchases,
appointments or commercial or technical
negotiations with either local or external
agencies. This non-interference policy
extends to the companies' internal systems
and financial activities. They are given
the full freedom and flexibility needed to
achieve the highest possible productivity
levels.
Saudi Aramco's Board of Directors
serves as the primary channel between the
Government and the fully governmentowned Saudi Aramco. The board oversees
the Company's operations, like any
successful international company board
does. Saudi Aramco pays taxes, returns
and profits to the Government, and is
financially audited based on clear and
fully transparent rules and regulations as
practiced in the developed countries.
The link between the Government and
the Saudi petroleum industry, on the
Government side, is the Supreme Council
for Petroleum and Minerals Affairs
(SCPMA), chaired by the Custodian of
the Two Holy Mosques. SCPMA is in
charge of the Kingdom's petroleum policy
and strategy, as well as the Saudi petroleum
industry's general plans.

The Role of Oil and Gas in the
National Economy

Oil provides a sizable contribution to
the gross domestic product (GDP),
Government revenues, balance of
payments and exports. Oil and gas also
play a major role in establishing other
industries and services related to them,
mainly petrochemicals, electricity, water
desalination, and energy-intensive heavy
industries. Over the past three decades,
the Kingdom has been able to establish a
unique petrochemical industry, pushing
the Kingdom to the forefront of
petrochemical producing and exporting
nations worldwide, with a share of
approximately seven percent of global
petrochemical production. This percentage
is expected to double through the coming
years. The petrochemical industry is fueled
by gas and oil for power and feedstock.

46

To explain the role of gas in supporting
local and foreign investments project in
the Kingdom, natural gas feedstock was
allocated a few years ago to 19
petrochemical projects with total
investments of approximately $7 billion.
These projects are planned to come onstream over the next few years. Also, in
2003, feedstock was allocated to 10 other
larger petrochemical projects with total
investments amounting to $20 billion.
These projects will produce approximately
18 million metric tons of petrochemicals
annually. Total petrochemical production
is expected to reach 70 million metric tons
in 2010.
The Kingdom also opened the
upstream gas-development sector to
international investment. As a result of
this initiative, concessions for four
exploration areas were awarded to
international companies which actually
started their exploration activities there.
This initiative was conducted with a high
degree of transparency.
Opening of the upstream gas sector
will lead to further expansion of Saudi
Arabia 's petrochemical industry. In fact,
the Kingdom's natural gas processing
capacity doubled over the past few years,
reaching approximately 7.5 BSCFD today.
Demand for natural gas is expected to rise
about 4 percent per year for all uses,
including electricity generation, as fuel
and industrial feedstock, and in water
desalination projects. By 2025, the
Kingdom will need an estimated 12-14
BSCFD of gas to meet demand.
In addition to the petrochemical
industries, the Kingdom will establish and
develop petroleum and energy-related
industries and services. The Ministry of
Petroleum and Mineral Resources, for
example, has participated in the efforts to
establish the privately owned and managed
Manufacturing and Energy Services
Company.
Efforts are now underway to establish
energy-intensive industries and utilize the
many mineral ores found in the Kingdom
and building value-added industries that
contribute to the development of the Saudi
economy. Next year, for example, the
construction of a railway to transport
bauxite and phosphate ores from the

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Kingdom's northern parts to the eastern
region will be offered in an open
international competitive bidding process.
A new industrial city will be constructed
on the coast of the Arabian Gulf as a center
to manufacture aluminum and fertilizers,
making the Kingdom one of Asia 's major
producers of those two products. These
projects are expected to be completed
before the end of this decade.
The Kingdom used its competitive
edge in oil and gas to sign an agreement
with Sumitomo Chemical of Japan . Saudi
Aramco and Sumitomo Chemical created
a joint venture to develop the Rabigh
Refinery on the Red Sea coast and
transform it into an international complex
for oil refining and producing and
exporting petrochemicals worldwide. A
similar project is being developed in
partnership with Dow Chemical to
similarly develop Ras Tanura Refinery.
One of the strategic objectives of the
Saudi Government is to decrease the
national economy's dependence on oil.
Oil's share of GDP was lowered from 60
percent 30 years ago to about 45 percent
now, and it is hoped that this percentage
will continue to decrease. The Saudi oil
industry was aware of the importance of
the local private sector and took the
initiative to develop the sector, enhance
its competitiveness and, thus, strengthen
the national economy.
It is infeasible for any economy to rely
on only one commodity, especially when
the income from that commodity is subject
to major fluctuations. An observer of the
international oil market may notice that
the Kingdom's production has ranged from
7.5 to 9.5 MMBD during the past few
years. The same applies to prices, which
fluctuate considerably from time to time.
The price of a barrel of oil has reached a
record high today of over $100 per barrel,
but only less than a decade ago the price
was around $10.
The Kingdom, therefore, is
encouraging and supporting the growth
and development of other economic
sectors. Several administrative steps have
been made to achieve this goal. In addition
to restructuring some sectors such as water,
electricity, labor, commerce and industry,
other reforms are being actively advanced,

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SPECIAL REPORT
including, establishment of the Supreme Economic Council in
August 1999, the General Investment Authority in April 2000
to facilitate foreign direct investments, the Saudi Communication
and Information Technology Commission in 2000, the Saudi
Geological Survey Commission in 2000, and the Capital Market
Authority in June 2003.
Reform initiatives also included the issuance of a set of
regulations and simplified strategies for investors, such as the
Foreign Investment Regulation in April 2000, the
Communications Regulation in May 2000 (which opened the
door for privatizing and investment), the Capital Market
Regulation in 2003 (which established the legal, constitutional
and regulatory framework for capital markets), the Insurance
Regulation in July 2003, the Mining Regulation and its Rules
for Implementation in 2004, the Corporate Tax Regulation in
January 2004, and the Privatization Strategy in June 2002.
These reforms were made in an environment of competency
and increasing transparency, with diminishing government
limitations and rising opportunities for foreign investors. The
reforms stress the adoption of the highest ethical and commercial
standards, and represent a huge step towards the establishment
of a solid economy.
The Kingdom's economic growth and prosperity has a positive
impact on other countries in the region and their citizens through
trade exchange, movements of capital, investment and recruitment
of citizens and others. The Kingdom has a total expatriate
workforce of approximately 6 million, who are transferring a
significant amount of money annually estimated at $18 billion.
This transferred amount of money has a positive impact not only
on financial and economical levels, but also at the social side.
The Kingdom is also a major foreign investor in many countries.
The trade between the kingdom and most of the region's countries
is the highest.n
Source: Ministry of Petroleum and Mineral Resources, KSA

Ambassador of the Royal Kingdom of Saudi Arabia to Islamic Republic of Pakistan

The Kingdom always stands by
the side of the people of
Pakistan in all circumstances
There are joint projects between Saudi and Pakistani businessmen in
the fields of banking services, construction and agriculture
Editorial Team of

I&M
I&M: Your Excellency you are
Prof. S.B. Hassan
serving as ambassador of the Royal Salman Hassan
Kingdom of Saudi Arabia In
Syed Azfar Hussain
Islamabad since 26th of July 2009.
May we have a brief account of your diplomatic
services to date?
H.E. Al Ghadeer: Our activities since holding the
responsibility of the diplomatic mission were focused on the
promotion of bilateral relations between the two brotherly
countries and to expand the extent of cooperation in all fields
and sectors. During the flood crises 2010, which swept away
many areas of brotherly Pakistan. I have visited all the flood
affected regions and personally supervised the distribution of
Saudi relief assistance among the flood affected people.
We worked closely with the Embassy and consulate staff
during the last year to facilitate the arrangements during the
previous Hajj season. And it is worth mentioning that The
Kingdom always stands by the side of the people of Pakistan in
all circumstances because of the brotherly and friendly ties
between the people of the two countries.

I&M: It is very heartening to learn that you have
been author of several books. Do you plan to write
some books on different subjects inclusive of
important historic events?

H.E. Al Ghadeer:With the help of Allah Almighty I wrote

34

a book on the subject "Dialogue and communication" which is
in Arabic language and through it I have highlighted the method
of communications with other people. I have also discussed
some political issues, and dealt with social phenomenon in other
books. I am about to complete some other books as well, which
will be published soon.

I&M: How do you feel about the services rendered
by the Embassy of Saudi Arabia for the promotion
of relations between the brotherly countries of Saudi
Arabia and Pakistan?

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Vol: XXXXIV

The Kingdom of Saudi
Arabia was the first
country to extend the
help to the brotherly
people of Pakistan and
to stand by the side of
the flood affected people
in all the regions and
provinces of Pakistan

H.E. Al Ghadeer: The Royal Embassy
of Saudi Arabia had proudly worked a lot
in order to enhance the brotherly relations
between the people of the two countries
and also strengthen the bilateral
cooperation in various fields, in all aspects,
as Pakistan holds a great significance for
the Kingdom of Saudi Arabia. The Royal
Embassy of Saudi Arabia would continue
to extend with the help of Allah Almighty
its support to the brotherly people of
Pakistan.

I&M: What is your degree of
satisfaction with the growth and
expansion of bilateral trade
between Pakistan and Saudi
Arabia?

H.E. Al Ghadeer: The previous period
has witnessed numerous visits for Pakistani
businessmen to the Kingdom as the
kingdom of Saudi Arabia is seeking to
deepen the economic relations and
commercial exchange between the two
countries and also looking for the
investment opportunities in various fields
and sectors in Pakistan. We hope that
Pakistan would come out of its current

Vol: XXXXIV

economic crisis soon.

I&M: Which sectors have seen
growth in exports from Pakistan?
In what sectors have Saudi Arabia
imports increased?

H.E. Al Ghadeer: PakistanÂ&#x2019;s export
of meat, fish, and rice to the Kingdom of
Saudi Arabia is growing constantly, other
exports from Pakistan include fresh fruits,
spices, honey, raw textile and tents.
Main exports from Saudi Arabia to
Pakistan include fertilizers, petrochemical
materials, beauty cosmetics and paper.

I&M: What is current status of
Saudi Arabia Foreign Direct
Investment (FDI) into Pakistan?
Should we expect an increase of
Saudi Arabia investment in
Pakistan, both government and
private?

H.E. Al Ghadeer: There are joint
projects between Saudi and Pakistani
businessmen in the fields of banking
services, construction and agriculture.

www.iandm.pk

I&M: Recently announced annual
budget of Saudi Arabia is said to
be higher than all previous
budgets. Would you like to mention
the salient features of the present
budget?

H.E. Al Ghadeer: General budget for
the state recorded about S.R 108,5 billion
as surplus in the budget for the year 2010
as compared to the assessments which
were expecting to record deficit of S.R
70 billion , where revenues reached S.R
735 billion and expenditures S.R 626,5
with increase in the revenues of S.R 265
billion over the original plan , where as
the actual expenditures increased by S.R
86.5 billion , which was attributed by the
ministry of finance to the expenditure of
the month thirteenth ( Muharram ) and to
new payments to execute the projects of
the holy Mosques and other holy places
and other military and security
expenditures. As regard to the budget of
the year 2011, the ministry of finance
made the assessment for the revenue as
S.R 540 billion and
the general
expenditure as S.R 580 with deficit
expected to be around S.R 40 billion,
where as the assessment of expenditure
for the year 2011 is less than that of the
actual expenditure for the year 2010 by
S.R 46.5 billion.
Usually the actual annual expenditures
exceeds the declared assessment of
35

expenditures by more than S.R 60 billion, and during the past
three years it increased to S.R 75 - 100 billion, and in case it
continues to exceeds the plane for the expenditure with the same
rate that prevailed during the last five years, then it is expected
for the actual expenditure for the year 2011 to be more than S.R
650 billion, that is at rate more than that of the year 2010.

The Kingdom of Saudi Arabia responded
immediately to the call of the Custodian of the Two
Holy Mosques by establishing an Air bridge between
the Kingdom of Saudi Arabia and Pakistan since the
beginning of the flood crises in Pakistan , where the
number of the Saudi aircrafts arrived in Pakistan was
about Thirty aircrafts within one and half months .
The Kingdom of humanity was the first country to
extend help to the brotherly people of Pakistan in all
the regions and provinces. Saudi Arabia dispatched
a number of caravans and trucks loaded with material
aid and food items for the affected people. It included
drinking waters and items needed in winter season
such as clothes and tents to provide shelter for
thousands of the affected families.This is beside the
Saudi people campaign in the Kingdom in response
to the initiative launched by the Custodian of the Two
Holy Mosques to support the flood affected people
of Pakistan . The relief campaign of the Custodian
of the two Holy Mosques for still provides the relief
items and aid to the brotherly people of Pakistan.
A team from Saudi Civil Defense also participated in rescue
operations to rescue the people besieged by flood waters.

On the Medical and Health level?

coordinating the Saudi efforts for reconstruction in the flood
affected regions .

Would you like to comment on your association with
the civil society in Pakistan ? NGOs and social welfare
organizations in Pakistan?

H.E. Al Ghadeer: All those people who are working with
non-government organizations and social welfare organizations
are providing their services to the people of Pakistan, we are
ready to cooperate with them.

I&M: What is the role of Royal Embassy of Saudi
Arabia in the promotion of arts and culture in
Pakistan?

As part of humanitarian efforts a field hospital was built in
Thatta Town in the Province of Sind which consists of two
hundred beds and equipped with the latest medical techniques
and equipments and related medical instruments, medicines and
all medical supplies. This is beside the participation of about
450 highly qualified surgeons and physicians and 60 male and
female doctors as volunteers to provide medical care and supervise
the medical services and surgical operations where about 40
surgical operations conducted to affected people.
All this has come as per the teaching of our religion of Islam
and the moral and human obligation to stand side by side with
the brotherly people of Pakistan in good times and bad times.

H.E. Al Ghadeer: There is a similarity in the culture and
heritage between the two countries. To introduce the culture,
arts, tradition and heritage of Saudi Arabia across Pakistan, there
is a popular heritage corner which particpates cultural festivals
in Islamabad.

H.E. Al Ghadeer: The people of Pakistan and Saudi Arabia
share many customs and traditions. The bond between the two
brotherly countries is ever lasting.
I would like to thank you for giving me the opportunity to
meet with the readers.n

H.E. Al Ghadeer: Kingdom of Saudi Arabia will continue,
with the help of Allah Almighty, to extend whatever aid possible
to the brotherly people of Pakistan. At this stage we are
36

I&M: Would you like to mention some details of your
hobbies?
H.E. Al Ghadeer: Reading and Travelling.

There is an excellent cooperation and
coordination between TAAP and the Royal
Consulate of Saudi Arabia in Karachi
The Kingdom of Saudi Arabia is home to almost a million Pakistanis. These
expatriates have gained respect and honor in the Kingdom of Saudi Arabia

Mr.
Muhammad
Yahya
Polani,
Managing
Director ,
Polani Tavels
and Chairman
Travel Agents Association of
Pakistan(TAAP) started his career
in the travel and tour sector in the
year 1973.He is an expert in the
category of Hajj & Umrah. He has
held various posts in several
associations and trade bodies . Mr.
Yahya Polani has been nominated
as Chairman of the Federation of
Pakistan Chambers of Commerce
and Industry(FPCCI) committee
on Aviation by FPCCI President
Senator Haji Ghulam Ali.
Polani Travels has around 100
employees. The Polani Group now
has 10 companies under its
umbrella and has a staff of 800.
38

Experience of working in multiple
and diversified sectors

Working in multiple sectors is always
useful. It has been very profitable as funds
continue to flow and resources are
employed optimally in diverse fields.
Therefore, one sector strengthens another
and offsets any loss. I have incurred losses
in few sectors, but recovered soon with
the support of my other established
businesses. This is the best formula for
successful business as you can never be
bankrupt with diversified investment.

TAAP Establishment: major
functions, duties and
responsibilities

TAAP was established in the year 1967
and has its own set of official rules and
regulations. It is registered with the
Government of Pakistan. TAAP has
registration with the Asian Travel Union
for Travel Agents with Head Office in
Singapore and also with the International
Air Traffic Association with Head Office
in Switzerland.
TAAP assists and facilitates in the
processing of visas with various embassies
and consulates and acts as the sole

www.iandm.pk

Editorial Team of
I&M
responsible
institution for liaison Prof. S.B. Hassan
Syed Azfar
between the clients
Hussain
and the consulates/
embassies or vice
versa .It also assists in providing bank
guarantees to cover the expenses for the
tickets issued by various airlines. The
organization also assists in providing visas
and addressing the various
consulates/embassies in providing them
guarantees for its smooth functioning. In
return, TAAP receives nominal fees from
its members to carry out its operations.

The procedure of Umrah

The preparation of Umrah commences
with the preparation of the following
documents:
1. Valid passport of person , age
being above 40 years
2. Four passport size photographs
3. National Identity Card
4. Medical Certificate
5. Return Air Ticket
When the person completes these
formalities for travel. He/she presents the
same to the nearest Travel Agent
recognized by TAAP along with the

Vol: XXXXIV

passport and requisite charges. The agent forwards this
information to the Saudi counterpart(Agent), who in turn arranges
through internet their stay, boarding and lodging in Saudi Arabia
through three authorized agencies recognized by Saudi Ministry
of Haj and Auqaf . These agencies are:
1. Bab Al-Umra
2. One way Umra
3. Al -Tawwaf
The above agencies transmit all the information to the ministry
of Auqaf which in turn refers it to the Ministry of Foreign Affairs
and then transmitted by them to the Consul general in Karachi
and after that visa is granted by the consulate as soon as possible.

Difference between Hajj and Umrah operations:

There is a vast difference between Haj and Umrah procedures.
Haj is directly dealt by the Pakistani Ministry of Haj &
Religious Affairs and in that TAAP has no role whereas umrah
procedures are dealt by TAAP

the Saudi Consulate in Karachi

Overseas Employment:

I handled the Hajj groups when they used to go by ship.
Although there were many difficulties at that time, the situation
was much better than it is now with modern aircraft.
The ministry has a lot of corruption on the one hand and the
national airline has a lot of problems on the other. The ministry
makes money through Hajj operations although it is a Muslim
country. On the other hand, the staff members of the national
flag carrier also create troubles for us.

The Kingdom of Saudi Arabia is home to almost a million
Pakistanis. These expatriates have gained respect and honor in
the Kingdom of Saudi Arabia.
As a manpower exporter, I think the best quality work is
produced by Pakistani nationals in foreign countries. That is
why remittances in the country have continued to flow. I believe
the expatriate Pakistanis are playing a pivotal role in strengthening our economy. Skilled employees should be encouraged
and facilitated if they desire to work abroad. In contrast, they
get little help from the government. Government should provide
more facilities to companies exporting manpower.

Relationship between Pakistan and Saudi Arbia

Government's Emphasis on Tourism in Pakistan:

Suggestions of Improving Hajj Operations

I pray to Almighty Allah from the bottom of my heart for
the long life and health of HRH Khadim al Harmain Sharfain
King Abdullah Bin Abdul Aziz.
I extend my deep appreciation and thanks to all the diplomatic
staff working here in Karachi consulate and also the embassy
staff in Islamabad. I would like to H.E Mr. Faleh Mohammed
Al ruhaily, the consulate general in Karachi. Mr. Anwar Abdul
Rahim Mirza, Incharge for Umrah & Hajj Visa, Mr. Abdullah
Sajaf in Employment Section, Mr. Obaidullah Al- Harbi in Visit
and Attestation Department and all the staff for their assistance
and cooperation.

Cooperation with the Royal Consulate of Saudi Arabia

There is an excellent cooperation and coordination between
TAAP and the Royal Consulate of Saudi Arabia in Karachi. The
Consul General H.E. Mr. Faleh Mohamed Al Ruhaily extends
full cooperation. His deputy, Mr. Anwar Abdul Rahim Mirza,
incharge for Haj and Umra Visas has always been helpful to us,
because of this excellent cooperation the procedure is smooth
and speedy.
The Saudi Embassy granted about 130,00 Umra Visas to the
intending umra pilgrims this season(figures upto 20-4-2011)
whereas last year. during the same period 100,000 visas were
issued. TAAP delivers daily about 4 to 5 thousand passports to

Vol: XXXXIV

The government of Pakistan should attract tourists by offering
them incentives in terms of facilities and proper infrastructure.
For Example; they can do that by providing tourists with clean
beaches and construct hotels and other form of accommodation.
The law and order situation is a major reason why we see a
decline in tourists visiting Pakistan. The travel advice given by
countries to their citizens to avoid visiting Pakistan because of
the deteriorating law and order also has its impact.

Effects of floods on tourism and aviation industries

Aviation and tourism industries will definitely get hurt
indirectly because of the dilapidated infrastructure of the floodhit provinces. Tourist spots have also been destroyed in KhyberPakhtunkhawa. Government apathy will delay the reconstruction
of these spots, so the population whose livelihood is depending
on tourism will suffer.

Present Priority:-

In my views, education and training play a pivotal role in
human development. So, I constituted an NGO, couple of years
ago to train government schools' teachers with English language
skills. I know it is very important for our nation because teachers
groom the new generation and if they are educated, our new
workforce will be better educated.n

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35

Saudi Arabia donates more than
$170 million for Pakistan flood relief
At the initiative of the Custodian of the Two Holy Mosques
King Abdullah bin Abdulaziz, Saudi Arabia will provide $80
million in humanitarian aid to Pakistan to alleviate the suffering
caused by massive flooding in multiple parts of Pakistan.
The donation is part of a larger Saudi effort to assist Pakistan.
A relief airlift consisting of 22 planes has already delivered
about 200 tones of supplies to flood victims; including food,
blankets, electrical generators, tents, water and medical supplies,
worth $70 million. Furthermore, a fund set up by King Abdullah
40

has already collected more than $100 million in donations from
Saudi citizens and businesses.
On August 22, King Abdullah issued an urgent directive for
the dispatch of two field hospitals to Pakistan, to provide medical
services. The capacity of each hospital is 200 beds and includes
an operating room, laboratory, pharmacy, intensive care unit
room, X-ray room and integrated medical supplies.
King Abdullah issued an additional directive sending a rescue
team from the Saudi Civil Defense and Border Guards to Pakistan,
to participate in the rescue of people trapped by flooding. The
first team members arrived in Karachi on August 23, aboard
three planes, and traveled to Hyderabad to undertake relief work
alongside the Pakistani Armed Forces in the Sindh region.
Another batch of Saudi rescue workers arrived in Pakistan on
August 24. The teams specialize in water rescue operations and
are equipped with vehicles, heavy equipment, electricity
generators, water purification stations, boats and other tools.
Major-General Najmuddin Khan, the head of the Pakistan Army's
relief operations in the southern Sindh region, praised the support
extended by the Kingdom, noting that it is the first country to
send such a rescue team.n

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relief efforts in flood-ravaged Pakistan at a meeting held August
11 under the chairmanship of IDB President Dr. Ahmed
Mohammed Ali. The Directors also approved allocations worth
$620.4 million for financing new development projects in
Morocco, Sudan, Egypt, Burkina Faso, Djibouti, Gambia,
Mauritania, Uzbekistan, Iran, Guinea and Cameroon. Additional
assistance was allocated to Muslim communities in Argentina,
Brazil, Ethiopia, Georgia, Paraguay and the Ukraine.n

Saudi Arabia gifts dates to Palestine,
the Philippines and Pakistan
In advance of Ramadan, Saudi Arabia has gifted countries
around the world with shipments of dates. Fifteen tons of dates
for Palestinian refugees were handed over by Saudi Ambassador
to Lebanon Ali Asiri at the Saudi Embassy in Beirut on August
3 to Palestinian Ambassador to Lebanon Abdullah Abdullah.
On August 5, Saudi Arabia handed more than 100 tons of dates
to the Filipino government. On the same day, the Saudi Embassy
in Islamabad gave more than 150 tons of dates to the Pakistani
government to distribute to those affected by massive flooding.n

IDB extends $11 million in relief
aid for flood victims in Pakistan
The Executive Directors of the Jeddah-based Islamic
Development Bank (IDB) approved a grant of $11 million for

1,000 trucks to provide
humanitarian aid to flood victims
in Pakistan
The Custodian of the Two Holy Mosques Campaign for the
Relief of the Pakistani People, which was launched August 16,
announced on August 28 that it will establish a land bridge to
Pakistan. The first convoy of 80 trucks, carrying 400 tons of
flour, 100 tons of rice, 64 tons of lentils, 24 tons of beans, 41
tons of powdered milk and 100,000 liters of cooking oil, was
dispatched on August 30. Upon arrival, the supplies will be
distributed to 20,000 people in the provinces of Punjab and
Kashmir. During the next three months, a total of 1,000 trucks
will provide humanitarian assistance to 2 million flood victims
in Pakistan. n

Medical team arrives in Pakistan
Eight Saudi cargo planes carrying members of a Saudi medical
team and equipment for one of two Saudi field hospitals arrived
in Islamabad on August 28. The Custodian of the Two Holy
Mosques King Abdullah bin Abdulaziz issued an urgent directive
on August 22 for the dispatch of two field hospitals to Pakistan
to provide medical services to people affected by torrential rains

Vol: XXXXIV

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41

and flooding. Saudi medical teams began arriving in Pakistan
August 26.
The first of eight aircraft carrying members of the second
field hospital departed King Faisal Air Base in Tabuk for
Islamabad on August 30. The hospital is staffed by 115 medical
personnel. In a statement, Saudi Ambassador to Pakistan
Abdulaziz Al-Ghadeer said that, following the installation of
the medical facilities, more than 250 doctors and technicians
are expected to come from Saudi Arabia to provide diversified
medical services around the clock.n

AGFUND donates $100,000 for
victims of Pakistan floods
The Riyadh-based Arab Gulf Program for United Nations
Developmental Organizations (AGFUND) announced on August
29 that it will donate $100,000 to relief efforts for flood victims
in Pakistan. In announcing the donation, AGFUND President
Prince Talal bin Abdulaziz said the funds will be channeled
through UNICEF and the U.N. High Commission for Refugee
Affairs. n

42

Crown Prince gifts 250 tons of dates
to Pakistanis
Three cargo aircrafts carrying a gift of 250 tons of dates from
Crown Prince Sultan bin Abdulaziz to the victims of flooding
in Pakistan started arriving in Islamabad on August 27. The
Saudi Embassy in Pakistan will supervise the distribution of the
dates to those in need.
Meanwhile, the Saudi Consulate in Istanbul has distributed
two tons of dates as a gift from Crown Prince Sultan to Turkey
on the occasion of the holy month of Ramadan.n

Saudi assistance for Pakistani flood
relief exceeds $240 million
Saudi Arabia's assistance to the people affected by flooding
in Pakistan stands at $242,198,993, the Ministry of Finance
reported last week. Saudi relief efforts have included the delivery
of large quantities of food and supplies by airlift and truck
convoy. Furthermore, millions of dollars have been raised through
contributions from Saudi citizens, officials and businesses to
the Custodian of the Two Holy Mosques Campaign for the Relief
of the Pakistani people.
The $242 million figure does not include the cost of the
rescue team from the Saudi Civil Defense and Border Guards
currently in Pakistan participating in rescue operations of people
trapped by flooding. Last month a Saudi team rescued 463 people
trapped in school buildings encircled by flood waters in the
Pakistani city of Sajawal.
On September 11, Saudi Ambassador to Pakistan Abdulaziz
Al-Ghadeer inaugurated the Camp of the Custodian of the Two
Holy Mosques for the Sheltering of People Affected by Floods
in Pakistan in the southern Sindh province. The facility, located
next to a Saudi field hospital, is sheltering 500 families and
providing relief materials. Ambassador Al-Ghadeer noted that

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the camp is an extension of Saudi land-route convoys, which
began delivering aid last week under the banner "1,000 trucks
for two million affected people in Pakistan."n

Camp in the city of Tata in southern Pakistan on September 22.
The installation is the largest relief camp in the region, providing
humanitarian services to Pakistanis affected by flooding. In a
single day, the medical center treated more than 900 patients,
and more than 80 wheelchairs have been provided to disabled
flood victims.
The Campaign of the Custodian of the Two Holy Mosques
to Provide Relief for the Pakistani People distributed 7,000 food
baskets on September 23 to families affected by flooding in
Charsadda in northwest Pakistan. Meanwhile, a Saudi Arabian
Airlines cargo airplane arrived at Karachi International Airport
on September 24 carrying the fourth batch of humanitarian relief
gifted by Crown Prince Sultan bin Abdulaziz Al-Saud. The plane
was carrying 85 tons of supplies, including 55 tons of dates and
30 tons of flour.n

Multi-pronged Saudi relief effort
continues in Pakistan
The International Organization for Intercontinental Doctors,
an affiliate of the Muslim World League, sent a team of 30
doctors from the King Faisal Specialist Hospital to help flood
victims in Pakistan. The team is working in Multan, the largest
city in the northern Punjab. The doctors brought along large
quantities of medicine and insecticide, water filters, which will
provide clean water to 15,000 people a day, and pumps to remove
stagnant water.
Saudi Ambassador to Pakistan Abdulaziz Al-Ghadeer and
several senior Pakistani officials attended the opening of expanded
facilities at the Custodian of the Two Holy Mosques Relief

Saudi Arabia continues to provide
food, tents in Pakistan
The Campaign of the Custodian of the Two Holy Mosques
for the Relief of the Pakistani People continued distributing aid
to flood victims on October 9 in southern Punjab. Approximately
2,000 baskets of food were given out to families at the Islamic
University of Bahawalpur. Meanwhile, Saudi Ambassador to
Pakistan Abdulaziz Al-Ghadeer participated in the distribution
of 4,000 food baskets to flood-affected people living in the city
of Rahim Yar Khan. In addition, Second Deputy Prime Minister
Prince Nayef bin Abdulaziz has ordered the provision of 5,000
tents to the victims of flooding in Pakistan at a cost of $589,979.n

IDB approves more than $772
million to finance new projects
The Jeddah-based Islamic Development Bank (IDB) has
approved the financing of several new development projects

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43

worth $772.3 million. The decisions were made during the 271st
session of the bank's board of executive directors, held on
October 5. Nine IDB member countries have been approved to
receive financing, including Indonesia, Uzbekistan, Bangladesh,
Pakistan, Sudan, Turkmenistan, Gambia, Mauritania and Albania.
Technical assistance in the form of grants for developmental
projects was approved for Benin, Chad, Togo, Sudan and Gulf
Cooperation Council (GCC) countries. The funding will also go
toward health and educational projects for communities in nonmember countries, including Congo, Fiji, India and South
Africa.n

gathering, Dr. Madani noted that the Kingdom has come to the
aid of the Pakistani people during every major disaster, including
the 2005 earthquake, the 2009 refugee crisis and the 2010
flooding. He described the unprecedented single-country
campaign to aid Pakistan launched by Saudi Arabia in the wake
of the current disaster.
The effort has included: a 30-cargo-plane airlift laden with
humanitarian supplies; the Custodian of the Two Holy Mosques
Campaign for the Relief of the Pakistani people, which raised
more than $107 million; a land convoy of one thousand trucks
that carried thousands of tons of wheat, 350 tons of dates and
30,000 tents to Pakistan; two field hospitals, along with medical
staff and equipment; and a Saudi search and rescue team.
In addition, Dr. Madani cited the appropriation of $120
million for Pakistan's energy sector; $200 million in credit
extended by the Saudi Development Fund (SDF); the transfer
of $200 million as a deposit at Pakistan's Central Bank; a grant
worth $100 million to assist people displaced by flooding; and
a number of memoranda of understanding signed between the
SDF and U.N. relief organizations worth $68 million.
According to Dr. Madani, the total amount offered by the
SDF for Pakistani development projects is estimated to be $700
million, while the total relief assistance already provided to
Pakistan amounts to more than $350 million.n

Saudi relief efforts for Pakistan
"unprecedented"
Minister of State for Foreign Affairs Dr. Nizar Madani led
the Saudi delegation to the 3rd Friends of Pakistan Conference,
which was held on October 15 in Brussels. Addressing the

Fifth Saudi relief convoy heads to
Pakistan
On October 22, Saudi Ambassador to Pakistan Abdulaziz
Al-Ghadeer launched the fifth convoy of Saudi relief supplies
to flood-affected areas of Pakistan. According to Dr. Khalid AlOthomani, Regional Director of the Custodian of the Two Holy
Mosques Campaign for the Relief of the Pakistani People, the
convoy includes 2,500 tons of humanitarian aid that will be
distributed to 53,000 families in 19 flooded regions. In a statement,
Dr. Farooq Sattar, Federal Minister for Pakistani Expatriates

44

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Affairs, thanked the Kingdom for its generosity. "We find our
Saudi brothers always stand side by side with us whenever the
Pakistani people suffer any distress or difficult circumstances."n

Sixth Saudi aid convoy launched in
Pakistan
On Jan. 18, Saudi Ambassador to Pakistan Abdulaziz AlGhadeer launched the sixth convoy in the land relief bridge run
by the Custodian of the Two Holy Mosques' Campaign to Relieve
the Pakistani People. The convoy consists of more than 550
trucks carrying various relief materials to be distributed in more
than 36 districts across Pakistan to people affected by recent
flooding.n

Pakistan receives 350 tons of dates
from Saudi King
The Saudi Embassy in Islamabad donated 350 tons of dates
on November 23 to the Pakistani government to assist the
country's flood victims. The food aid was gifted by the Embassy's
Acting Charge d'Affaires, Mohammed bin Nafie Al-Madani, on
behalf of the Custodian of the Two Holy Mosques King Abdullah
bin Abdulaziz.n

Saudi medical team arrives in
Rawalpindi
The third group of medical professionals tasked with operating
a Saudi field hospital arrived in Rawalpindi on December 1 to
provide medical and therapeutic services for Pakistanis affected
by disastrous flooding. Upon arrival, the team, which included
60 doctors, practitioners, specialists, technicians and
administrators, was received by a number of senior Saudi and
Pakistani officials.n

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46

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Khadim-AL-Harmain
Al-Sharfain
King Abdullah Bin Abdulaziz

HRH Crown Prince
Sultan Bin Abdulaziz

Ambassador of the Royal kingdom of Saudi Arabia

H.E. Mr. Abdul Aziz Bin
Ibrahim Al Ghadeer
visit to Karachi

Ceremony held to honour the workers and volunteers who participated in the
rescue and relief operations in the flood affected areas of Pakistan

Ambassador of the Royal kingdom
of Saudi Arabia H.E. Mr. Abdul Aziz
Bin Ibrahim Al Ghadeer visited Karachi
to express appreciation and give rewards
to workers and volunteers who
participated in the rescue and relief
operations to alleviate the sufferings of
the flood affectees. The Award giving
ceremony was held at the Consulate
General of Saudi Arabia in Karachi.
H.E. Mr. Abdul Aziz Bin Ibrahim Saleh Alghadeer the Ambassador of the Kingdom of Saudi
Arabia speaking on the occasion of ceremony held recently at the Consulate General
of Saudi Arabia, Karachi, Pakistan

Vol: XXXXIV

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His Excellency the ambassador, in
his speech, thanked all those who
selflessly participated in the noble and

47

H.E. Mr. Abdul Aziz Bin Ibrahim Saleh Alghadeer the Ambassador
of the Kingdom of Saudi Arabia keenly looks at the copies of
Investment & Marketing (I&M) International Magazine in which
comprehensive coverage about Saudi Arabia has been published,
Prof. S.B. Hassan, President & Chief Editor, I&M presenting the
copies to His Excellency, the Ambassador.

His Excellency, the Ambassador of Saudi Arabia meeting
Prof. S.B. Hassan of I&M.

The group shows (from r to l) the Consul General of UAE, the Consul General of Saudi Arabia,
H.E. the Ambassador of Saudi Arabia, the Consul General of Kuwait and Prof. S.B. Hassan of I&M

48

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Vol: XXXXIV

H.E. Mr. Abdul Aziz Bin Ibrahim Saleh Alghadeer the Ambassador
of the Kingdom of Saudi Arabia presenting souvenior to
H.E. Mr. Faleh Mohammed Al-Ruhaily the Consul General
of Saudi Arabia on the occasion of the award ceremony

General view of the audience on the occasion of ceremony
recently held at the Consulate General
of Saudi Arabia, Karachi, Pakistan.

humanitarian task and helped Pakistanis
who suffered during the disastrous flood
never confronted before.

Allah protect him) for providing rescue
and relief to the sufferers of the
devastating floods in Pakistan.

The ambassador commended the
contribution and active role played by
the officers and executives of the
Consulate General of Saudi Arabia
stationed in Karachi.

The ambassador also expressed thanks
to the Pakistani officials who
acknowledged with gratitude the
assistance provided by different agencies
of the Kingdom of Saudi Arabia.

The ambassador mentioned with
great appreciation the execution of
directives which came from the
custodian of the Two Holy Mosques
King Abdullah Bin Abdul Aziz(May

As significant parts of this ceremony
were distribution of books specially
prepared as records of the contribution
of Saudi Arabia during the crisis and
an exhibition of documentary film which

described the intensity of the disastrous
floods and the documented scenes of
relief and rescue operations conducted
by various Saudi Agencies.
The ceremony was attended by
Consul Generals of GCC stationed in
Karachi, distinguished citizens of this
metropolis and the media which included
major newspapers and television
channels. The ceremony concluded with
a sumptuous lunch offered to guests by
the Consul General of Saudi Arabia in
Karachi, H.E. Mr. Faleh Mohammed Al
Ruhaily.n

Wife of H.E. Faleh Mohammed Al Ruhaily, Consul General
of the Royal Kingdom of Saudi Arabia visited many welfare
centres of children in Karachi.
The following centers were visited:
1. Dar us Sakoon(for Mentally & physically disabled children.)
2. Anjuman Kashan-e-Itfaal(for Orphan Children)
3. Al Huda International Welfare Foundation.

The Custodian of Two Holy Mosques King
Abdullah Bin Abdul Aziz had ordered to cancel
the celebrations of Saudi National Day to express
unanimity and harmony with the flood affected
people of Pakistan.
celebration of the National Day of Saudi Arabia
was distributed among the organizations working
for the physically and mentally handicapped and
disabled children of Pakistan. It may be recalled
that Saudi Arabia is the first country of the world
that helped the people in flood affected areas of
Pakistan by establishing the biggest Air Bridge
for Relief Aid. In addition to this, the workers
of Saudi Civil Defense participated in the rescue
activities for flood affected people of Pakistan.
The Kingdom of Saudi Arabia is continuing
its efforts in helping these people to date in the
supervision of H.E. Mr. Abdul Aziz Ibrahim Al Ghadeer,
Ambassador of Royal Kingdom of Saudi Arabia.
Moreover, the Consul General of Saudi Arabia in Karachi
H.E. Mr. Faleh Mohammed al Ruhaily also gave donation in
cash to the Society for Promotion of Arabic Language. This
donation was offered to help orphan students studying in this
institute.n

A general view shows the Saudi holy city
of Mecca, as seen from the top of Noor
mountain, late on November 13, 2010.

Hajj 2010 in pictures

A Saudi worker stitches Islamic calligraphy in gold thread on a silk drape to cover the
Kaaba at the Kiswa factory in Mecca Saudi Arabia on November 8, 2010. The Kaaba cover
is called Kiswa and is changed every year at the culmination of the annual Hajj or pilgrimage.

44

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Saudi special forces show their skills during
a military parade in preparation for the Hajj
in the Saudi city of Mecca on November
10, 2010.

Vol: XXXXIV

SPECIAL REPORT

Saudi special forces take part in a military
parade, preparing for the Hajj in Mecca on
November 10, 2010.

Saudi Arabian men ride on the newly-opened Holy Sites metro light rail in Mecca on
November 2, 2010. The Chinese-built monorail project, links Mecca with the holy sites
of Mina, Arafat and Muzdalifah

Saudi workers load carboys of "zamzam"
water containers at the Zamazemah United
Office in Mecca, on November 7, 2010.
According to Islamic belief, zamzam is a
miraculously-generated source of water
from God, which began thousands of years
ago when Abraham's infant son Ishmael
was thirsty and crying for water and
discovered a well by kicking the ground.
Millions of pilgrims visit the well each
year while performing the Hajj or Umrah
pilgrimages, in order to drink its water.

Pilgrims pray on the side of Mount Arafat, near Mecca, Saudi
Arabia on Monday, Nov. 15, 2010.

A pilgrim visits the Hiraa cave on Noor
mountain late on November 13, 2010 during
the annual Hajj. According to tradition,
Islam's Prophet Mohammed received his
first message to preach Islam while praying
in the cave.

Pilgrims climb up Mount Arafat on the Plain of
Arafat in Saudi Arabia on Monday, Nov. 15, 2010.

46

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Vol: XXXXIV

SPECIAL REPORT
The Grand Mosque and the four-faced clock,
atop the Abraj Al-Bait Towers are seen from
the top of al-Noor mountain in Mecca, Saudi
Arabia on Nov. 11, 2010.

Pilgrims pray atop Mount Arafat, southeast of Mecca,
on November 15, 2010. Pilgrims flooded into the
Arafat plain from Mecca and Mina before dawn for
a key ritual around the site where prophet Mohammed
gave his farewell sermon on this day in the Islamic
calendar 1,378 years ago.

46

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Vol: XXXXIV

SPECIAL REPORT
Muslim pilgrims circle the Kaaba at the center of the
Grand mosque in Mecca during the annual Hajj
pilgrimage November 11, 2010.

Muslim pilgrims perform Friday prayers in front of the Grand Mosque in Mecca,
on November 12, 2010.

46

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A Muslim pilgrim prays at the top of Noor
Mountain, on the outskirts of Mecca, Saudi
Arabia on Thursday, Nov. 11, 2010.
source: The Boston Globe

Vol: XXXXIV

Heading Strongly Into the Future
The Saudi economy is
becoming more energetic as
investment in massive new
infrastructure projects, economic
cities, oil and gas, petrochemicals,
and other industries, become
reality. Even though high oil
prices have been the initial
stimulant, the baton of growth is
shifting to the private sector,
driven by reinvigorated
confidence, growing domestic
demand and rationalization,
institutionalization and
deregulation of its economic
structure. "We are keen on
making our economy a
prosperous and diversified one,"
King Abdullah has said, "as well
as an economy which is capable
of playing a pioneering role in
regional and international arenas
and meeting the aspirations of its
citizens."
But what is to happen with
Saudi Arabia when its oil era
finally ends? The House of Saud
has contemplated this inevitable
reality and created the abovementioned projects as a motor for
diversification, part of a National Industrial
Strategy known as "Vision 2020". Already
over the past three decades the nonoil sector has grown from 35 percent to
more than 60 percent of the total GDP.
Saudi financial institutions forecast that
by year's end the non-oil private sector
will grow 8.9 percent in real terms, the
highest growth in 25 years.
Any economic success still hinges on
the creation of stability in the Middle East.
A major objective of Saudi Arabia's foreign
policy is settlement of the Arab- Israeli
conflict. Among the Saudi efforts to bring
peace to the conflict, there were two peace
initiatives in 1982 and 2002 offering
solutions based on the United Nations
resolutions 242 and 338. The consensus
is that should the Palestinian-Israeli
conflict be settled, by implementation of
either the Abdullah Peace Plan or President

Vol: XXXXIV

Bush's Road Map, it will positively affect
the outcome of other regional issues.
"We are keen on making our economy
capable of playing a pioneering role in
regional and international arenas and
meeting the aspirations of its citizens."
King Abdullah bin Abdulaziz Al-Saud
Former Saudi Ambassador to the US
Prince Turki Al Faisal says that working
together on these issues is the key to
creating stability in the Middle East, as
well as dealing with violent insurgents
and terrorist cells.
"Only Muslims can counter the
terrorists who would use Islam to promote
their actions," Prince Turki elucidates.
"They intentionally misinterpret the
teachings of Islam, and we Muslims
expose their falseness and hypocrisy."
King Abdullah has been a tireless
proponent of dialogue for the cause of

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calm across the region, and has
indicated that Saudi Arabia, with
its decades of experience in
fostering stability, is best suited
to conduct whatever measures are
necessary to secure peaceful
solutions. "Peace and security are
the most important pillars of a
stable society and prerequisites
for development," the King said.
In the King's 2007 policy
address to Saudi Arabia's Shura
(consultative) council, he
explained that "The Kingdom's
eighth Five-Year Plan (20052009) aims to build on the
achievements of the previous
plans, designed according to a
strategic perspective with the aim
of achieving sustainable
development. The plan has
focused on a package of priorities,
led by preserving
Islamic values; enhancing
national unity, social stability and
national security; upgrading
standards of living; providing job
opportunities for Saudi
jobseekers; developing the
workforce and enhancing its
skills; diversifying the economic base;
increasing private sector contribution to
development; achieving balanced
development in all parts of the Kingdom;
developing sciences, technology and
informatics; supporting and encouraging
scientific research and technological
development, preserving and developing
water resources; and protecting the
environment."
Saudi Arabia is in a strong position to
fulfill its plans as it has the resources to
finance them. If it can clear the
misconceptions held by western nations
about the country, its people, and its
culture, that would be a major step in
itself. But that's exactly where the
challenge lies, as the country resolves to
break free from close-knit secrecy and
transform itself into a transparent, open
society, economy and government.n
61

Foreign Investors Courted
by $700 Billion Bonanza
Below the desert's surface Saudi
Arabia's natural resources may account
for 25 percent of the world's total oil
reserves, but above ground the Kingdom
has a wealth of assets waiting to be
developed. "We have over $700-billion
worth of investment opportunities in Saudi
Arabia over the next 15 years," says HRH
Prince Turki Al Faisal, Former Saudi
Ambassador to the US. "American
businesses should take advantage of that."
In December 2005 the Kingdom officially
joined the World Trade Organization,
providing it with greater opportunity to
enhance its business and investment
climate and drive competition.
Four centerpieces of business activity
in the years to come will be the mega
economic cities, tax free centers of finance,
healthcare, and technological development.
"The Kingdom has been liberalizing its
trade policies, enacting new regulatory
laws, increasing transparency, and opening
up our economy to investment. We have
also enacted a new law allowing foreign
businessmen and women to obtain visas
without an invitation."
Saudi Arabia is not only actively
reducing its dependency on oil, but is also
trying to decrease its reliance on foreign
workers. Human Resources of Saudi origin
are being trained to take on the new job
opportunities offered by the economic and
industrial cities, and education reforms
target a curriculum that prepares students
for globalization. "We have undertaken a
multi-year modernization program of our
education system" explains Prince Turki.
"More than 300 technical and vocational
colleges are being built in the next five
years. The Saudization process on the
other hand limits the number of foreign
employees in order to slowly decrease
dependency on them." The process is not
only significant to alleviating
unemployment but also instills a greater
sense of responsibility in the Kingdom's
youth, according to Prince Turki. Investors

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have the good fortune of being able to
access the Saudi market in its era of
"economic openness".
Up until recently certain sectors were
still closed to foreign involvement, but a
new law lift ed many of the barriers, as
Mr Hamad Al-Sayari, Governor of the
Saudi Arabian Monetary Agency, explains.
"The Foreign Investment Law was enacted
in 2000 to allow the international
community to make direct investment in
most of the county's economic sectors
without having to act through a Saudi
partner. The sectors that are restricted to
foreign investment are minimal and
comprise only those which are of strategic
importance."
The Saudi Arabian Monetary Agency
functions as the Kingdom's Central Bank,
issuing the national currency (the Saudi
Riyal), pursuing an appropriate monetary
policy, promoting price and exchange rate
stability, and supervising the banking and
insurance sectors. Under its supervision
the country counts as one of the most
financially stable in the region.
The banking sector in particular has
enjoyed unparalleled growth, particularly
in the Islamic Banking division, a service
offering financial management compliant
to Islamic Sharia laws. "By December
2006," says Mr Al-Sayari, "on a year to
year basis, the banking sector's total assets
increased by 13.3 percent, loans and
advances by 10.3 percent, and total
deposits by 20.8 percent. In addition, Saudi
banks are adequately liquid at 34.8 percent,
and most showed record profits, with the
sector's net profits registering a 41-percent
increase over 2005." The Kingdom's fiscal
achievements are pivotal within an
initiative to implement a Greater Arab
Free Trade Zone towards the establishment
of a Common Arab Market (CAM).
"The establishment of a GCC
Monetary Union and the introduction of
a common currency by 2010 will be an
important development for the region,"

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confi rms Mr. Al-Sayari.
One sector in particular is showing
some of the most promising developments
modern Saudi Arabia has witnessed. "I
believe that we are on the threshold of an
ICT revolution," remarks Dr Mohammed
Al Suwaiyel, Governor of the
Communications and Information
Technology Commission (CITC). "The
high growth rates achieved in mobile
services, PC literacy and internet usage
combined with the establishment of the
necessary frameworks to encourage
foreign investment and joint participation
in telecommunications projects suggests
that, while there is still much work to be
done, we are catching up with global
leaders in the ICT sector at a fast pace.
Since being set up in 2002, the CITC has
granted three mobile provider licenses,
two for 3G services, two for data services
as well as four VSAT provider licenses."
Despite the expected challenges faced
by having undertaken an ambitious
liberalization program in a very short time,
including initial inertia, maintaining order
in introducing competitiveness to a
previously monopolistic sector, attracting
and training qualified human resources,
CITC is committed to continue granting
new licenses to further the Kingdom's
development.
"Computer sales in the country
increased from $881 million in 2005 to
$1.5 billion in 2006," says Mr Al Suwaiyel
of the CITC's Home Computing Initiative
which spurred PC manufacturers to
establish plants in the Kingdom. As a
result, Internet usage has nearly doubled
in the last two years to 20 percent of the
population. It has all become part of a
grander scheme to turn Saudi Arabia into
a "smart" nation, with technological
convergence covering everything, from
e-government to Wi-Max cities, and it has
been witnessed in other countries that
once the ICT ballgets rolling, the
opportunities are endless.n

63

Cultivating Sustainable Agriculture
Among one of the great
misconceptions about Saudi Arabia is that
its desert land image renders it hostile to
agriculture. Not only is this far from the
truth, but the Kingdom's combined fertile
regions make agriculture and agribusiness
the third largest sector in GDP revenues.
In fact Saudi Arabia produces, and to a
great extent exports, a huge variety of
quality products.
Fresh cut flowers find their way
to the Netherlands and olive oil is sold
to Spain. The nation has also embarked
on aquaculture and other break-through
activities, fully exploiting its mainland
and aqua assets.
The Kingdom's agricultural growth
was not merely achieved by cultivating
arable land, but the result of a highly
focused program on solving some
tricky challenges. Understandably,
water is not readily available
throughout Saudi Arabia, calling for
closely monitored irrigation
management, as well as crops that are
not water intensive. Nevertheless, an
ambitious agricultural plan embarked upon
three decades by the country's leadership
to enlarge the Kingdom's cultivated area,
with the cooperation of local and
international investors, bore a high yield
of fruits, vegetables, livestock and dairy
products. "We have managed to produce
a high self sufficiency in products such
as wheat, fresh milk, eggs and potatoes,"
says Dr Fahad bin Abdulrahman bin
Suleiman Balghunaim, Saudi Arabia's
Minister of Agriculture. The
aforementioned products now cover 100
percent of the Kingdom's needs. Minister
Balghunaim says poultry production
satisfies 50 percent of national needs, and
general vegetable and fruits cover 85 and
65 percent respectively.
In fact, the country's wheat program
was so successful in attaining set targets
that reforms were needed to quell
production. "We have reached very high
levels of wheat production, so now we
produce wheat for local consumption only,
which is roughly 2.5-2.6 million tons per

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year. Export of wheat has been disallowed
and the government no longer buys barley
from the farmers." The reason for this,
says Minister Balghunaim, is the fact that
wheat needs a lot of water, so anything
above the basic needs is not necessary.
"We would like to produce more crops
with less drops of water. We encourage
farmers to go to greenhouses; we are

developing means for farmers to switch
to drip irrigation instead of ground
irrigation. Large agricultural companies
and big farmers realize this very easily,
because they are using deep wells and the
more they use the water the higher their
electricity bills."
But also smaller farmers are being
guided by the Agriculture Ministry's
support. Take dates, of which Saudi Arabia
now produces some 900 million tons
annually. "The government buys dates
from small farmers and distributes them
among underprivileged people here and
around the world, especially in world food
programs and countries affected by
disasters."
The Saudi government used to buy
dates at three riyals (0.80 cents) per kilo,
but after careful consideration it agreed
to buy them at five riyals ($1.33) per kilo
as an incentive for small farmers to switch
to drip irrigation.
"In two years' time they can pay back
the cost of drip irrigation," says Minister
Balghunaim, adding that the Saudi Arabian

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Agricultural Bank (SAAB) provides loans
for the equipment and subsidizes 25
percent of mechanisms that help reduce
water consumption.
Since joining the World Trade
Organization, Saudi Arabia has opened
up its agricultural market, importing
products without tariff s, save for some
key crops.
"In our negotiation with the WTO,"
explains the Agriculture Minister, "we
have requested and obtained some
tariff s to protect some of our major
agricultural products because they
affect a lot of people, specifically
wheat, dates, chickens, and fresh milk.
But everything else is open." Shrimp
farming in particular has become a
focal point of aquaculture, as the
Kingdom is able to utilize its 1,500mile long Red Sea coast and its
advantageous location between both
European and Asian markets. Currently
exporting to 18 countries worldwide,
the country is engaging in an ambitious
plan with the private sector to become the
biggest exporter of shrimp. Foreign
investment is highly welcomed in the
agriculture sector, and major companies
from Europe and New Zealand such as
Danone and Arla have already moved in
to the promising dairy industry.
Despite the success and progress made
in the sector, Minister Balghunaim confers
that Saudi Arabia still has to actively deal
with adverse conditions. Scarce rain,
meager subterranean water, limited local
manpower and widely dispersed
cultivatable lands are among the
Kingdom's difficulties. "We are conscious
about our limitations, and we do not want
to push the limits of sustainable
agriculture." Initiatives have been
implemented to control the spread of
desertification, including the establishment
of 27 forest nurseries in addition to coastal
mangrove nurseries, as well as five
national parks. All in all, the Kingdom's
agricultural developments have enabled
it to achieve important objectives while
at the same time conserving its resources.n
83

Saudi Arabia's Economic Cities

A New Era of Economic
Wealth and Prosperity
Economic Cities: Pockets of Competitiveness

Provide a comprehensive package to investors

Objective of the economic cities
To grow the national economy and raise the standard of
living for Saudis through:
Enhancing the competitiveness of the Saudi economy
Creating new jobs
Improving Saudis skill levels
Developing the regions
Diversifying the Economy

Creating Partnerships

Global innovation in public private partnerships (PPP)

The Kingdom of Saudi Arabia has announced the
launch of six economic cities

Vol: XXXXIV

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65

To ensure success, the economic cities will be developed according to six key design principles

The ECs will be important for the economic growth
of the Kingdom and the prosperity of the Saudi
individual

With Saudi Arabia's coastal areas well
served with industrial clusters, the government
focused its infrastructure efforts on bridging
the country between the Red Sea and the
Arabian Gulf. It also opened an opportunity
to create an economic cluster at the very heart
of the Kingdom's most prosperous provinces.
At the crossroads of all the navigational, trade
and transportation routes in Saudi Arabia lies
Ha'il, where the $8-billion Prince Abdulaziz
Bin Mousaed Economic City (PABMEC) will
rise to prominence. "The project aims to utilize
the Kingdom's second competitive advantage
after energy - its strategic location as a link
between East and West- and leverage it through
the establishment of a fully integrated economic
city providing transportation and logistics services. Produce and
minerals arriving from the north of Saudi Arabia and surrounding
areas within Ha'il region will be traded, marketed and processed
to add value to the raw materials," says SAGIA's Governor Mr
Al-Dabbagh.
Built on 156 million square meters, PABMEC'S core Master
Development Plan will include as a main pillar a Supply,
Transportation and Logistical Services Center. At the same time,
the dry port, airport, land freight sector, in addition to the agroindustrial zone, as well as the mining and processing industries
sectors will constitute the energetic nerve of the economic city.
Moreover it will be supported by a robust and solid infrastructure
in addition to the business, residential, and recreational sectors.
As the economic cities are intended to be self funded by the
private sector, it is the developer's task to secure the investment.
Hot off the heels from an 18- city global road show promoting
PABMEC, Mr. Abdullah Taibah, CEO of the city's developer
RA KISA Holding, said the company had in fact succeeded in
soliciting more than 8 billion Saudi riyals. The consortium
includes key investors from Saudi Arabia, UAE, Bahrain and

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67

Jazan Economic City: Generating
Strategic Advantages

Kuwait. "Phase one will be completed by
2016, and will hopefully generate more
than 30,000 jobs," says Mr. Taibah. "Agrobusiness, mining, and the building materials
industry are at the heart of its sustainable
business model. The addition of the dry
port will give the city a backbone of logistics
infrastructure that will support these
clusters." An IPO has also been planned by
RA KISA for the city. PABMEC will not
only bridge the gap between the country's
major cities, but also between technology
and education. As RA KISA's CEO puts it,
"We are putting our fingerprint on the
future."

Knowledge Economic City in
Madinah
"Enlightened by the Spirit of Al
Madinah"
Attracting Muslims from around the world

The main aim of Saudi Arabia's mega
projects is to give a profound energy boost
to the Kingdom's economy. The first phase
in developing these pioneering economic
cities is providing them with the power to
rise, especially since most will be located
on virgin grounds.
The $30-billion Jazan Economic City
(JEC) is the fourth mega project to be
established in the Kingdom. Its grand
ambitions will be ignited by a new 3,000
MW power plant. From day one of the
project's launch by King Abdullah in
November last year, JEC has brought in
three anchor tenants who will drive the
industrial development of the city. "We have
signed memorandums of agreement for an
aluminum smelter, a dry dock at the seaport,
and a steel processing plant.
In addition, a refinery is being planned by ARAMCO. In
that aspect this project is unique compared to all the other
economic cities," said Mr. Feizal Ali, Group Chief Executive of
MMC Corporation Berhad. MMC is the premier Malaysian
utilities and infrastructure group that together with the equally
influential Saudi BinLadin Group (SBG) has been awarded the
contract for JEC's construction.
Located 37 Miles northwest of the provincial capital Jizan,
the brand new Jazan Economic City will occupy an area of 40
square miles with a coastline of 7.1 miles. Two thirds of the city
will be covered by primary and secondary industries and one
third will be commercial and residential. The future city will
not only be located at the confluence of available raw materials
and abundant labor source, but also tap into the main Red Sea
shipping route between Europe, Africa, and
Asia. JEC's connectivity will be enhanced by the new
International Airport at Jizan, a proposed artery road running
east, and a future railway link with Jeddah, 375 miles northwest.
Besides its strategic location, Mr Feizal points out that JEC
will aim to offer enterprises the competitive advantage of cheap
energy, a must for most industries.
On many fronts it is in active discussion with the Saudi
Arabian General Investment Authority (SAGIA) to get full
cooperation from all parties involved. "This can sometimes be
understandably difficult because it is a new project, but SAGIA
has been able to iron out all issues fairly rapidly," attests Feizal.
The power plant ,which has an integrated desalination facility
for the city's vital water supply, will run on Saudi crude oil.
"We are leveraging on the energy advantage of Saudi Arabia
so that it will be extremely competitive for enterprises to establish
themselves here."
The JEC project seeks to extract the provinces' full potential.
Jizan's hinterland is rich with mineral deposits.n

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Vol: XXXXIV

Custodian, King, & Carrier of the Future

To his citizens he is known as the
Custodian of the Two Holy Mosques, a
reference to Mecca and Medina, the most
important sites in Islam.
The honorable designation comes even
before his royal title, which makes King
Abdullah bin Abdulaziz Al-Saud not only
the current ruler of the Arabian Peninsulas
largest and most powerful nation, but also
a revered figurehead to Muslims
worldwide. Since succeeding the throne
on August 1, 2005, following the passing
of his half brother King Fahd, King
Abdullah has reached across Saudi
Arabias borders to enhance diplomatic
and trade ties.
A major step in building a future
beyond oil has been the Kingdoms entry
into the World Trade Organization (WTO).
It hailed in a new era for Saudi Arabia,
which is now training its human resources
to compete on a much broader level. In
order to take full advantage of its
capabilities, Saudi Arabia also needs to
increase female participation across all
sectors, as women make up 50 percent of
the workforce. King Abdullahs
progressive agenda has already opened
new paths for womens involvement in
economic and socio-political processes.
Key professional and public sector
positions are increasingly being taken up
by and assigned to women, especially in
the more cosmopolitan city of Jeddah, but
much still needs to be done to harness
their full potential.

Growth feeds growth

Since December 2005, the King has
also inaugurated some of Saudi Arabias
most ambitious real estate projects to date.
Four Economic Cities have been
announced that will lead the Kingdoms
60

diversification strategy into the next few
decades. These mega projects have been
accompanied by an equally impressive
wave of new universities, colleges, and
training institutes. They form the
foundation of King Abdullahs vision to
feed greater industrialization by creating
a knowledge-based economy. The buzz
around the projects has already created an
ever-expanding momentum. Business is
up 17 percent, expansion plans have
resulted in more orders and contracts for
Saudi industries and services, and non-oil
exports rose to $2.16 billion in April this
year.
In his State of the Kingdom address
given in April this year, King Abdullah
said that due to the importance of
investment in the national development,
we are planning to continue our support
for the private sector to become a strategic
partner in the economic development. We
are also removing all obstacles facing
Saudi and foreign investors so that they
can benefit, whenever possible, from the
proportional privileges in the Saudi
economy. This opens new doors for the
United States which, together with Japan,
is the Kingdoms top trade partner. SaudiUS trade grew 16 per cent to a record
$39.49 billion last year, compared to $34

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billion in 2005.
King Abdullah has maintained good
ties with the United States, frequently
meeting with the US President and highranking officials to discuss the Arab peace
process and counter-terrorism efforts. He
has not wavered in his condemnation of
the taking of innocent lives and in his
denunciation of deviant groups that falsely
claim to be Islamic. At the CounterTerrorism International Conference in
Riyadh in February 2005, he urged
international cooperation to fight this
global scourge. I hope that a new world
will emerge, a world that is blessed by
virtues of freedom, peace, prosperity, and
harmony.
As Saudi Arabia looks ahead, King
Abdullahs pursuit of modernity and
democracy indicates that this strategic
powerhouse is a concerned, active global
citizen, ready to tackle difficult issues
through constructive and peaceful means.
The King is adamant that unity and balance
within the Middle East is the only solution
to maintaining not only political but also
energy security. After all, oil continues to
be the Kingdoms main source of income.
King Abdullah explains, Saudi Arabia is
aware of its international responsibilities
and is working to create fair prices to this
resource by taking into consideration the
interests of the producer and the
consumer.
Most importantly, the economic
restructuring, entrepreneurial and largescale projects being overseen by the Saudi
Arabian General Investment Authority
(SAGIA) aim to elevate the Kingdom
among the 10 most competitive economies
of the world. Known as the 10 x 10 plan,
the strategy might just be Saudi Arabias
ticket to a dazzling future.n

Vol: XXXXIV

Mastering the Challenges of Globalization
Advances in liberalization and diversification lead the way
A mighty nation created by strong
leadership and the calculated management
of its natural resources, Saudi Arabia now
has to deal with its future. Its evolution
into a modern economy is necessary in an
increasingly competitive and globalized
world. The Kingdoms December 2005
accession to the WTO goes a long way in
converging the countrys successful, yet
protective, past and its more open,
accepting present.
We have three challenges in Saudi
Arabia, analyzes Dr Fawaz Al Alamy,
Deputy Minister of Commerce and
Industry. Number one is our young
generation. Sustainable development needs
to concentrate on the brainpower of both
boys and girls. We grade people who can
add value to the country, so we need to
revamp the education system and create
jobs. We need to direct them toward their
future aspirations.
The second issue, likely the most
crucial for the Kingdom, is the need to
drastically reduce dependence on oil as a
main source of income. 80 percent of
our revenue is from oil and that is not
good, admits Dr Al Alamy, so we have
to diversify and raise investor confidence,
the confidence that Saudi Arabia is creating
a level playing field and applying its rule
of law. To do that we need to be within
an international system that will cater for
us, and that is the WTO. That is why a
swift accession was important, so that we
could sit down and debate with our friendly
countries and open up to international
investment.
Third is our GDP growth which must
be much higher, twice as much as our
population growth, so that we can sustain
this development. Over the last two
decades Saudi Arabias population growth
has been 3.2 percent, while GDP growth
is less than 3.2 percent. To increase that
we have to increase our professionalism,
inter-trade efficiency, commercialize, and
then privatize these trade enterprises.
In all three challenges Saudi Arabia

A swift accession to the
WTO was important so
that we could sit down and
debate with our friendly
countries and open up to
international investment.
Dr Fawaz Al Alamy
Deputy Minister of Commerce
and Industry
faces the issue of human resources, as it
currently needs to bring in foreign work
force to fill most sub-management
positions. Saudi Arabias Minister of
Finance Ibrahim Al Assaf says that the
government has expanded the higher
education infrastructure in the last three
years to increase the number of colleges
in medicine, nursing, science, information
and communication technology, and
engineering. We faced fiscal challenges
in the past which prevented us from
building up the education system. We
realize more has to be done to improve
the quality of Saudi human resources and
bring new skills to the Saudi market. The
most valuable and largely untapped pool
of labor in Saudi Arabia is women, which
could make up 50 percent of the work
force. Many moves have been made in
recent years by the Saudi government to
bring more women into decision-making
positions.
Reforms have also led to wide-scale
privatizations and liberalization, creating
a more open economy. Closer ties with
the surrounding Gulf Cooperation Council
(GCC) countries is a logical step as the
trade, skills, and experiences of countries
like the United Arab Emirates (UAE),
Qatar, and Oman are similar to that of
Saudi Arabia. The UAEs advanced
economy has guaranteed a high Human

Development Index, Qatars social
infrastructure has been facilitated by the
countrys natural resources windfall, with
guaranteed free education for all nationals,
andOmanization has been a successful
example of integrating national citizens
in the economy. The last example has also
been adopted in the Kingdom as
Saudization, but Mr Omar Bahlaiwa,
Secretary General of the Committee for
International Trade, says foreign investors
should not misconstrue it.
Saudization does not mean to impose
Saudis on the job, it means qualifying
Saudis to do the job, explains Mr
Bahlaiwa. At the same time we should
input part of our investment to bring the
know-how and human resources
development in finance, training, skills,
preparing the environment, and preparing
the youth for the market place. All this
should be the trend of Saudization in the
next decade or so. Where Saudi Arabia
intends to excel, besides remaining a global
leader in oil and gas, is in fostering a
powerful private sector, which already
contributes 44 percent to its GDP, and is
growing by 6 percent annually.
WTO membership greatly supports
economic expansion and allows the
Kingdom greater access to more markets.
As a result, Saudi Arabia is attaining the
best of global business standards,
international regulations and protection.
Saudi Arabia is a partner, not an isolated
entity, assures the Secretary General of
the Committee for International Trade.
The economic cities currently under
construction are the most poignant
example that Saudi Arabia is building a
rapport with partners all over the world,
as the cities rely on large-scale foreign
direct investment.
We have a lot of projects from now
until 2020 that are worth over $623 billion
in opportunities and will encourage Saudi
Arabia to be a strong contributor to the
WTO. We need the world to come and
share the future with us.n

The Kingdom Beyond Oil
The Kingdom Beyond Oil
Saudi Arabias great boom of the
seventies, when revenues from oil exports
really started to flow, laid the groundwork
for one of the most economically dynamic
regions of modern times. Consistently
high oil prices of recent years have sparked
a second renaissance for Saudi Arabia.
This time, the Kingdom is covering all its
competitive bases by creating projects of
such an immense magnitude, that they
have officially been branded as Economic
Cities, rising from the Kingdoms ample
desert and coastal lands. With four Cities
officially initiated by King Abdullah and
two more on the horizon, the mega projects
facilitated by the Saudi Arabian General
Investment Authority (SAGIA) are aimed
at increasing foreign capital involvement
in the Saudi economy as well as creating
jobs for Saudi nationals. The Cities are
primarily intended to provide financial
security for the countrys next generation.
Building on its strengths, Saudi Arabia is
diversifying and re-inventing itself with
innovative plans to grow the economy
beyond oil and gas.
That Saudi Arabia is serious about its
future is exemplified by the impressive
large-scale developments taking place.
Under the auspices of SAGIA, successful
joint ventures have been awarded to
construct the King Abdullah Economic
City (KAEC) on the Red Sea coast 90
miles north of Jeddah, the Knowledge
Economic City (KEC) in Medina, the
Jazan Economic City (JEC) on the
southern Red Sea coast, and the Prince
Abdulaziz Bin Mousaed Economic City
(PABMEC) at the central city of Hail.
Combined the Cities form the vision of a
new Saudi Arabia, in which SAGIA is the
central component around which these
new developments take shape.
Establishing an integrated system of
Economic Cities, explains SAGIAs
Governor Mr Amr Al-Dabbagh, creates
a competitive environment that is able to
provide everything from A to Z, including
commercial and residential land, visas,

Vol: XXXXIV

This project is something we do
for our childrens future.
Mr Nidal Jamjoom,
CEO of Emaar

labor force, entertainment, everything to
provide the best quality of life for the
inhabitants and investors. One of
SAGIAs roles in this ambitious vision is
to serve as a One Step Shop, a
comprehensive services center where
everything needed to license and register
a company can be handled in one place,
with one representative. Having a complete
overview of all the opportunities on offer
at the cities now rising on the Kingdoms
horizons, SAGIA is able to direct interested
parties to the destination that best fits their
needs. The grandeur of King

Abdullah Economic City

The first and most magnanimous of
the current projects is the King Abdullah
Economic City near Rabigh. Construction
started in 2005, on the very day (December
20) that King Abdullah announced the
cityto- be. The master plan has already
been up-scaled to five times the original
design. Covering a total development area
of 64 square miles, roughly three times
the size of Manhattan, the city will
comprise the regions largest sea port on
the vital Red Sea route with capacity of

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over 10 million containers per year, a light
industrial district of 24 square miles, an
educational zone complete with university,
a financial island at the heart of a central
business district, seaside resorts and
residential areas. Due to the citys
proximity to Medina and Mecca, the port
will even have a terminal dedicated to
pilgrimage travelers. The total
development cost is estimated at
approximately $27 billion, and when
KAEC is completed it will provide jobs
for nearly 1 million people.
Our goal is to have the first phase
completed by the end of 2008, says Mr
Al-Dabbagh. As for how it will catalyze
and expand the Saudi economy, we expect
a combined effect of the six Economic
Cities to contribute $150 billion to the
countrys economy, become home to over
4.5 million people, and increase the per
capita GDP from $13,000 to $33,500.
SAGIAs Governor points out that even
though the function of these cities is to
diversify the economy, the diversification
will happen within the boundaries of the
countrys core competitive advantages of
energy and location. Adding value to the
petrochemicals thereby takes front stage.
69

Mr Al-Dabbagh adds that Saudi
Arabia is the most cost effective
location in the world for hosting these
industries, a fact that could make the
Kingdom a true energy capital of the
world.
Interestingly, Deputy Governor of
SAGIA Mr Fahd Al-Rasheed, in
charge of the Economic Cities
Agency, says that the development
costs are to be covered by the private
sector, starting with the developers.
We selected from the top offers that
provide the financing capabilities and
the experience in developing such
large projects.
The KAEC project was awarded
to Dubai-based Emaar Properties, the
worlds largest real estate company
with over $40 billion worth of
business. EMAARs CEO, Mr Nidal
Jamjoom, stresses that one of the key
objectives of the city is to create jobs
for young Saudis. This project is
something we do for our childrens
future, and that is what keeps me
going every day. There are not many
smart cities in the world today, and
the whole idea of creating Economic
Cities is in fact an innovation for
Saudi Arabia, states Mr Jamjoom.

A new landmark for Medina

An innovation of equal importance
to the Islamic world is Knowledge
Economic City (KEC) at Medina, the
second most holy city of Islam. The
$7-billion hightech project is designed
to turn the Medina region into a centre
for knowledge-based industry where
young Saudi entrepreneurs will be
trained and nurtured. It will also attract
the best Muslim Information
Communications Technology (ICT)
talent from around the world. About
half of the countrys 20 million local
population is under the age of 20, and
by building the Economic Cities in
regional areas, the government is
taking a positive step towards creating
employment for its young people. The
Al Madinah Al Munawwarah region
in the northwest of Saudi Arabia has
particular significance for the country

70

and the Muslim world in general.
Twice a year during the Hajj and
Umrah pilgrimage 10 million people
pass through the area en route to
Mecca. Medina was the home of the
Prophet Mohammed, the place where
he is buried and where the Quran was
compiled. The modern Medina is also
home to some of the Kingdoms
leading educational institutions, has
a growing ICT industry, and piloted
the countrys new e-Government
program. The positioning of the KEC
on the outskirts of Medina, just 7
kilometres from the airport, fits well
with existing infrastructure.
KEC is expected to create 20,000
new jobs and provide a solid return
for investors who participate as
partners, sub-developers, venture
capitalists, or direct investors. KEC
has already attracted a powerful
consortium of Saudi companies,
including the Savola Group, Taiba
Investments and Real Estate
Company, Project Management
Development Company (PMDC) and
Quad Intl Real Estate Development
Co. In addition, since November has
signed deals with several interested
parties from the US, Canada, and
Malaysia.
This includes MoUs signed with
some of the biggest names in the IT
world, such as Intel Corporation,
Cisco and CompTIA with further
announcements expected in August.
The Malaysians in particular see
the potential for high-tech industry in
the region, having gained plenty of
experience from the development of
their own Multimedia Super Corridor
(MSC).
In February this year, a trade
delegation led by Malaysias Deputy
Prime Minister Najeeb Tun Razaq
visited Medina and signed several
deals that will give KEC the benefit
of MSCs expertise. The project is
the only one of the six Economic
Cities that has the direct involvement
of the King Abdullah Foundation,
which is providing the land for the
development.n

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Knowledge
Economic Citys
High Aspirations
It is expected to attract a population of
150,000, host up to 10,000 visitors in world class
accommodations, and develop 30,000 residential
units on a total build area of 2,421 acres. The
KEC rising in Medina, under the management
of the Seera City Real Estate Development
Company, is already attracting investor interest
for its unique amenities. Seera City Chairman
Sheikh Ibrahim Al Eissa says KEC will combine
the concepts of Intel Corporations digital city
and Cisco Systems smart city. The project will
include a hightech park for knowledgebased
industries, a centre for medical sciences and biotechnolog y, research centers and scientific
development, an educational/entertainment (eduta
inment) pa r k themed around the Prophets
heritage, a centre for Islamic civilization studies
and research, a multi-modal transport center, a
world-class business district and a major retail
hub inspired by the old Souks of Medina. We
want to establish strategic partnerships to develop
and operate key components in the project, says
Chairman Sheikh Ibrahim. We want to get
together with leading international technology
f i rms , ICT- f o c u s e d venture capital funds
and Infrastructure funds. Seera City Marketing
Manager Mohammad Khoja is understandably
enthusiastic about KEC.
Its attracting some of the worlds leading
experts in smart cities of knowledgebased
industry, because not only do they recognize the
value of the project in terms of education, training
and the development of ICT skills and industries,
but they also understand the significance of
Medina as a heartland of Islam, says Mr Khoja.
This is an ambitious, challenging, creative,
exciting and essential project that reaches out to
people of all cultures and backgrounds around
the world.
It will act as a cultural landmark serving
residents and visitors to Al Madinah and become
a national icon for knowledge-based industrial
development. We have made a good start and
still have a long way to go, but our location at
Medina is a blessing that I am confident will
assure us of success, he says.n

Vol: XXXXIV

Constructing the New Saudi Arabia
The real boom in real estate
What is the Arabian Peninsulas
fascination with real estate? Almost every
single country within the GCC has at least
one, but more often, several mega projects
underway in groundbreaking, skyscraping
and awe-inspiring construction work. It
could be a byproduct of the abundant
unused desert land, but that does little to
explain the island clusters magically rising
from the sea. The simple answer would
be that after decades of filling up national
coffers with oil revenues, the Gulf nations
have the resources to bring almost any
real estate desire into reality  from
residential units to retail resorts and
hyperluxury hotels to Economic Cities.
But theres more to the construction boom
than meets the gazing eye.
Real estate development in Saudi
Arabia is undergoing a veritable quantum
leap. With over 420 major projects in
progress, including four Economic Cities
and two more on the list, one in the
northwestern Tabuk region and another
expected near the new Ras Al Zour
minerals port in the Eastern province, one
may wonder if this boom is sustainable.
There are clearly risks attached to this
grand vision, but the potential benefits for
the Saudi economy in terms of
modernization, diversification,
employment, education and general
advancement of the Kingdom far outweigh
any calls for caution. Persistently high oil
prices have created such a solid economic
environment in the region that the main
challenge now is how to manage the
success. Construction needs energy, and
Saudi Arabia together with similar Gulf
States is at a 30 percent cost advantage in
power generation with the availability of
cheap oil and gas. Infrastructure expansion
is therefore the first step in creating a
stable base for continued economic
stability. Real estate is a long-term
investment with potentially high and
lasting returns. The International Monetary
Fund assesses that there are $700 billion
worth of projects currently ongoing or

Vol: XXXXIV

pending in the Gulf, and estimates are that
the regional power sector needs $61 billion
in new investments by 2011 in order to
support this construction surge.
By involving contractors who build
and fund the projects rather than the
Government footing all the costs,
development projects are more profitable,
timely, and conscientious of environmental
issues and design aesthetics.
Incorporating the financial input of the
developers entails the revamping of the
banking sector to accommodate the
requirements of long-term financing.
Unfortunately, the rise in demand for
contractors also means a rise in
construction costs, as well as lapses in the
supply of raw materials, such as the
shortages already registered for cement
and steel. It is Saudi Arabias challenge
to keep a cap on the already astronomical
figures attached to the current projects.
In a column of the Arab Times Top-

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100 Saudi Companies supplement
(November 27, 2006), Editor in Chief
Khaled Almaeena comments that Saudi
Arabia has such a massive spending power
worldwide that an order made or canceled
here could make or break an industry on
the other side of the world. That demands
responsibility. Local economists have
also suggested that the development of
the mega cities should be scheduled
properly in consultation between the
government and the contractors in order
to avoid bottlenecks in the economy. A
labor force of 1.3 million will be needed
when the projects are scheduled for
completion, so the pace of development
should match the skilled manpower supply.
Currently many Southeast Asians are
taking up the tasks offered by the projects,
but the cost of living has already increased
by 2.9 percent in April 2007, according
to a report by the General Statistical
Information Department of the Ministry
of Economy and Planning. Even though
this figure is still well below the
inflationary spiral registered in certain
neighboring countries, the existing salary
structure may need to be reviewed, much
as it has in India and the Philippines. Over
50 companies are licensed to sell and
develop real estate in Saudi Arabia, and
they are eager to feed the housingdemand
of the Kingdoms over 20 million
inhabitants, 70 percent of which are under
30 years of age. Kingdom Holding
Company, the countrys top earning group
headed by billionaire businessman Prince
Alwaleed bin Talal, has also planned two
mega projects in Riyadh and Jeddah. With
total consolidated assets up to $25 billion
in 2006, the company is well placed to
add such prestigious real estate projects
to its already diversified portfolio.
Traditional and emerging players such as
the Alshoula Group and Inmaia also
headline the construction and real estate
sector, and despite aforementioned
concerns they prove that its the right time
and place for thinking and building big.n
79

Connecting All The Dots

Infrastructure revamp spurs greater growth
With infrastructure spending over the
next five years forecast at $5-7 billion,
Saudi Arabia is truly a transportation
developers paradise. The Kingdoms
transport network is undergoing a major
overhaul in order to bridge all the vital
passenger and cargo clusters. If Saudi
Arabia is to become the next global trade
hub, connecting the lines between the Red
Sea ports and Gulf-side industries via
central logistics and business centers is of
the utmost importance.
We are working on all fronts of the
transport sector as it is a key element to
our economic development plan, says
Saudi Arabias Minister of Transport Mr
Jobarah Al Suraisry.
With regards to highways, we are
not only connecting every city but also
connecting Saudi Arabia with the
neighboring countries. There is heavy
traffic coming from the north, from
Lebanon, Turkey, and Syria, with a lot
of imports for the Kingdom and other
Gulf countries. Less than 40 years ago
the total length of roads was limited to
a few thousand miles. But the
significance of interconnectivity in the
oil age rapidly raised the infrastructure
profile and by 2006 Saudi Arabia had
constructed close to 95,000 miles of
roads. One of the most important current
road projects is the 480- mile expressway
that serves as a land bridge between Jubail
Industrial City on the Arabian Gulf and
Yanbu Port on the Red Sea.
This coast-to-coast connection is also
the basis of a new tender by the Saudi
Railway Organization to connect
Dammam to Jeddah via Riyadh. It will
double the existing railroad network
between Riyadh and Jubail, transforming
it into a world-class freight and passenger
rail link across the country. In addition, a
high-speed train link between Mecca,
Medina, and Jeddah will provide
comfortable and fast transportation for
pilgrims visiting the holy cities each year.
The rail link will have a station at the King

Vol: XXXXIV

Abdullah Economic City and a spur will
be constructed to Yanbu port. The third
project is a north-south railway for our
large mineral deposits in the Kingdoms
northern part, says Minister Al Suraisry.
The train will take all these raw materials
to the Eastern Province. Roads, railways,
and the countrys 204 airports form a
lifeline for Saudi Arabias ports, the largest
of which is Jeddah Islamic Port which
receives over 65 percent of the countrys
imports. A new terminal will be
constructed at Jeddah that will increase
the ports capacity by 45 percent.
The Transport Minister indicates that
the terminal in Jeddah will have a capital
investment of around $370 million, while

an expansion at Dammam Port is estimated
at $106 million. A brand new port at Ras
al Zour to process and transport raw
minerals will also be a heavy investment
according to the Minister, but will add a
great deal of value to the countrys profile.
Saudi Arabias ports are healthy, dynamic
entities since the Saudi Ports Authority
undertook the pioneering step of
privatizing all port operations in the
Kingdom.
The privatization program was the first
of its kind in any part of the Saudi public
sector when it was implemented in 1997
and completed in 2000. The program
contains a commitment to modernize and
increase all equipment levels with the

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private sector being fully responsible for
operational costs. The Saudi Ports
Authority ensures crediting a certain
percentage of the operational income to
the national exchequer through a contract
period of between 10-15 years.

Yielding profits from
Yanbu port
The ports of Saudi Arabia are divided
according to specialization into two
subdivisions. Firstly there are the six
commercial ports in Jeddah, Dammam,
Jubail, Yanbu, Jizan, and Dhiba, and
secondly the industrial ports located at
Yanbu and Jubail. Known as King
Fahad Industrial Port, Yanbu is
considered to be the biggest port for
loading crude oil and its refined
products on the Red Sea Coast, as well
as being the longest (linear) port in the
Middle East. Its advantageous location
close to the Suez Canal gives Yanbu
access to world markets. In 2006, Yanbu
Industrial Port handled nearly 84 million
tons of cargo and received 1,766 ships
at its 25 berths. Yanbu Industrial Ports
Director General, Mr Hamoud Bin
Abdu Al Saadi, says that the success
in efficiency and productivity increased
substantially since privatization of services
started 9 years ago. New projects in port
facilities renovations reached $29 million,
says the Director General. The access
channel was dredged which increased
water depth to 32 meters, allowing the
berthing of bigger and Very Large Crude
Carrier (VLCC) ships. The port also has
a plan to build new berths and terminals
to handle the added production of factory
extensions in Yanbu. Through these
developments along with extended training
of its employees, the port yielded a total
income of $31 million in 2006 and
continued to apply its policy of reducing
administration and operational expenses.n

77

Taking a Closer Look
at Saudis Charms

Maximizing the National Tourism Development Strategy
Every year, over 2.5 million people,
different in language, race, color, gender,
culture  but united in faith and purpose,
form the largest gathering of humanity in
any one time or place. Every able-bodied
Muslim, who can afford to do so, is
required to make a pilgrimage to Mecca
at least once in his or her lifetime. For the
past 14 centuries, the ritual known as the
Hajj has been performed as a spiritual
experience
of
goodwill,
discipline,generosity, and brotherhood.
With up to 1.4 billion followers
of Islam in the world today, the
2nd largest religion after
Christianity, and travel
becoming ever more accessible,
the number of pilgrims to both
Mecca and Medina has grown
substantially. In 1983 the
number of pilgrims coming
from abroad exceeded one
million for the first time.
The Saudi Government has
spent nearly $25 billion in
renovating and expanding
facilities and infrastructures for
pilgrims. It can be considered
an investment in religious
tourism. Besides this yearround source of income, Saudi
Arabia is now also putting on a charm
offensive to attract visitors to many of its
other wonders. The Supreme Commission
for Tourism (SCT) has set up a National
Tourism Development Strategy to increase
exposure in family and cultural tourism,
national and regional tourism,
environmental tourism, and business
tourism. Re-organizing the tourism
industry as a productive economic sector
is extremely important because it is a
service which has to be organized from

Vol: XXXXIV

the ground up, comments the SCTs
Secretary General, HRH Prince Sultan bin
Salman bin Abdulaziz Al-Saud. The
reorganization, which started mid 2005,
is focused on the Kingdoms regions with
the creation of local commissions and
boards. The internal market has enormous
growth potential, according to Prince
Sultan. There are also programs running
in schools, with the help of the education
ministry, training children to become better
tourists and enjoy their country.

Our focus is on keeping the Saudis
at home, admits SCTs Secretary General.
The challenge is to keep these very well
spending tourists, 4.5 million a year, from
traveling abroad, to give them new
products, competitive prices, and family
programs. Ideas for attracting youth
include car races, rallies, boat shows and
diving, a sector experiencing a
tremendous surge, says Prince Sultan.
Saudi Arabia also has a rich historic and
archaeological heritage, largely unknown

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outside its borders, and cultural tourism
programs can seamlessly be combined
with trips from Red Sea resorts.
The Supreme Tourism Commission
was given control of the governments
heritage sector, including museums and
archaeological antiquities, in order to curb
bureaucracy. We are doing a lot to bring
the culture, crafts, colors, and foods of
the country into the spotlight, Prince
Sultan comments.
SCTs masterplan involves creating a
synergy between tourism and
society, where regions can
develop economically and
create
employment
opportunities within their
communities. The aim is to
realign the national vacation
structure, starting with the
introduction of a weekend
culture for short trips to various
regions. Later, in about 5 years
when major infrastructure and
transportprojects are complete,
Prince Sultan believes the
Kingdom will be ready to move
into mass tourism models.
Quizzed on why the
development of tourism in
Saudi Arabia has taken such a
long time to take shape, he answers, it is
a big sector.
It takes a lot of work and a lot of
people. Furthermore, we got caught in a
period where everything was happening
at the same time so passing laws and
regulations took a long time. But even
though the sector is in its infancy, the
energy and interest raised in its potential
has got people rearing to go places, and
taking a closer look at the sacred secrets
of the Saudi Kingdom.n

81

Saudi Industrial
Development
Fund:
Fulfilling Industrial
Objectives

Following Saudi Arabias WTO accession, the government
has geared its efforts towards welcoming and aiding new
arrivals to its industrial sector. Its support for private sector
projects is not a recent trend. Since 1974, the Saudi Industrial
Development Fund (SIDF) has provided loans as well as
technical and consultative assistance to promising start-ups.
Administratively part of the Ministry of Finance, SIDF is a
corporate entity that uses a sound economic feasibility policy
to determine the projected success and necessity of applicants.
The substantial growth in demand for SIDF loans over the
years resulted in several government approved increases of
SIDF capital, which now amounts to $5.33 billion. SIDF is
funded primarily through medium to longterm loans extended
to national and foreign interests in the private industrial sector.
Although its activities remain identical to when it first
started, SIDFs focus has evolved over the years, as the Funds
Acting Director General Mr Mohammed Dobaib explains.
Between 1960 and 2000, investors were most interested in
the energy industry, but it was noticed that during the period
2001-2005 they have been attracted by new areas, such as
transportation, insurance and financial services, and
construction. In light of the Kingdoms strategy to diversify
its industrial base, more emphasis should be given to
investments that serve that goal. Mr Dobaib adds that foreign
direct investment will play a key role in promoting non-oil
exports, accompanied by the introduction of modern
management techniques, technology transfer, and maximizing
added value.
In the early 1960s, the Kingdom was fully importing its
needs from abroad, recalls Mr Dobaib, hence SIDF facilitated
credit to industrial activities following the import-substitution
strategy. Currently most companies that benefited from the
Funds credits are mainly producing for the local market.
However, the Fund now encourages companies to give
more consideration for exports to WTO members utilizing
locally available raw materials. This includes cement and
petrochemicals, and SIDF is involved in three $4 billion mega
projects that will produce 3.5 million tons of ethylene and one
million tons of propylene. Through these projects and a high
rate of fully repaid loans, SIDF reflects the continued success
of industrial development in Saudi Arabia.n
76

Saudi Ports
12,000 ships visit Saudi Arabias 8 ports every year. That is
one ship every 30 minutes. With 95 percent of Saudi imports
and exports passing through the Kingdoms seaports, they are
major contributors to the national economy and the main link to
the global economy. Since 1997 the management system had
matured enough to be handed over to the private sector. During
the last few years, the privatization resulted in a sharp 85 percent
increase of the total cargo throughput, while TEU (twenty-foot
equivalent units) throughput rose 700 percent and transshipment
1000 percent. The Ports Authority nevertheless maintains a
supervisory function.
Today the two main ports of Saudi Arabia, Jeddah Islamic
Port on the Red Sea and King Abdulaziz Dammam Port in the
Gulf, have become high-tech goliaths of cargo handling and
maintain a distinguished edge over other ports in the region.
Both now operate with the electronic cargo logging system Saudi
EDI, and are undergoing major upgrades to substantially expand
capacity. The operator of the container terminal in King Abdulaziz
Port in Dammam, International Ports Services (IPS), has started
a huge development project to improve and expand the terminals
operations. The project is expected to increase the terminals
capacity from 800,000 TEU to 2 Million. It includes the dredging
of the basin and approach channel, the provision of new gantry
cranes, rubber-tyred gantries (RTG), ground equipment, and the
reallocation of key activities.
The privatization of Jeddahs port had already brought a
massive investment of more than $535 million during the past
6 years, and in 2006 an agreement was signed with the Saudi
Commercial and Export Development Company (Tusdeer), to
develop and operate the ports third container terminal with a
capacity of 1.5 million TEU. Director General Mr Sahir Tahlawi
explains that the conversion of 5 of Jeddahs 58 berths will
increase capacity for the existing two terminals by 2 million
TEU to 7 million by 2010, allowing Jeddah to retain its leading
position in the region. The port, apart from its obligation of
providing a safe haven for the embarkation, disembarkation, and
associated services of the Haj and Umrah pilgrims, had to provide
dedicated services for cargo handling with specialized terminals.
Jeddahs advantage is also attributed to its ship repair yard and
floating dry docks. With 49 berths equipped with modern facilities,
the two industrial ports in Jubail & Yanbu provide a safe handling
system for Saudi Arabias industrial exports. A significant
expansion program at these ports will add 8 more berths within
2 years.
The driving force behind the success of Saudi Arabias ports
has been the global increase in cross-global trade and
transshipment and their ability to react to new demands of the
next generation container freighters. Combined with the new
rail links between the Jeddah and Dammam ports, Riyadh, Mecca,
and Medina, the Kingdom is truly becoming a significant multimodal transport hub.n

www.iandm.pk

Vol: XXXXIV

The Making of a
Competitive Kingdom
Every year, over 2.5 million people,
different in language, race, color,
gender, culture  but united in faith
and purpose, form the largest gathering
of humanity in any one time or place.
Every able-bodied Muslim, who can
afford to do so, is required to make a
pilgrimage to Mecca at least once in
his or her lifetime. For the past 14
centuries, the ritual known as the Hajj
has been performed as a spiritual
experience of goodwill,
discipline,generosity, and brotherhood.
With up to 1.4 billion followers of
Islam in the world today, the 2nd
largest religion after Christianity, and
travel becoming ever more accessible,
the number of pilgrims to both Mecca
and Medina has grown substantially.
In 1983 the number of pilgrims coming
from abroad exceeded one million for the
first time.
The Saudi Government has spent
nearly $25 billion in renovating and
expanding facilities and infrastructures
for pilgrims. It can be considered an
investment in religious tourism. Besides
this year-round source of income, Saudi
Arabia is now also putting on a charm
offensive to attract visitors to many of its
other wonders. The Supreme Commission
for Tourism (SCT) has set up a National
Tourism Development Strategy to increase
exposure in family and cultural tourism,
national and regional tourism,
environmental tourism, and business
tourism. Re-organizing the tourism
industry as a productive economic sector
is extremely important because it is a
service which has to be organized from
the ground up, comments the SCTs

62

Secretary General, HRH Prince Sultan bin
Salman bin Abdulaziz Al-Saud. The
reorganization, which started mid 2005,
is focused on the Kingdoms regions with
the creation of local commissions and
boards. The internal market has enormous
growth potential, according to Prince
Sultan. There are also programs running
in schools, with the help of the education
ministry, training children to become better
tourists and enjoy their country.
Our focus is on keeping the Saudis
at home, admits SCTs Secretary General.
The challenge is to keep these very well
spending tourists, 4.5 million a year, from
traveling abroad, to give them new
products, competitive prices, and family
programs. Ideas for attracting youth
include car races, rallies, boat shows and
diving, a sector experiencing a
tremendous surge, says Prince Sultan.

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Saudi Arabia also has a rich historic
and archaeological heritage, largely
unknown outside its borders, and
cultural tourism programs can
seamlessly be combined with trips
from Red Sea resorts.
Tourism Commission was given
control of the governments heritage
sector, including museums and
archaeological antiquities, in order to
curb bureaucracy. We are doing a lot
to bring the culture, crafts, colors, and
foods of the country into the spotlight,
Prince Sultan comments.
SCTs masterplan involves creating
a synergy between tourism and society,
where regions can develop
economically and create employment
opportunities within their communities.
The aim is to realign the national
vacation structure, starting with the
introduction of a weekend culture for short
trips to various regions. Later, in about 5
years when major infrastructure and
transportprojects are complete, Prince
Sultan believes the Kingdom will be ready
to move into mass tourism models.
Quizzed on why the development of
tourism in Saudi Arabia has taken such a
long time to take shape, he answers, it is
a big sector.
It takes a lot of work and a lot of
people. Furthermore, we got caught in a
period where everything was happening
at the same time so passing laws and
regulations took a long time. But even
though the sector is in its infancy, the
energy and interest raised in its potential
has got people rearing to go places, and
taking a closer look at the sacred secrets
of the Saudi Kingdom.n

Vol: XXXXIV

Gaining on Competitiveness
Becoming competitive is a big concept
in theory, but even more so in practice.
How does a nation produce goods and
services which meet the test of
international markets, while
simultaneously maintaining and expanding
the real incomes of its people over the
long term? to borrow from the OECD
definition of Competitiveness. This is the
fundamental question facing Saudi Arabia
today, and the cornerstone towards
building its modern day economy.
There are three important
competitiveness reports, explains Amr
Al-Dabbagh, governor of the Saudi
Arabian General Investment Authority
(SAGIA). The World Banks Ease of
Doing Business Index, the Institute for
Management Developments rankings,
and the World Economic Forum Global
Competitiveness Index. All in all, these
three reports benchmark against 300
different indicators. We have a master
plan for improving polices and procedures
that correspond to each and every one of
these indicators. Governor Dabbaghs
brainchild, made possible by the Kings
vision, is known as the 10x10 program.
As SAGIAs most ambitious goal to date,
this program aims to achieve a Top 10
ranking for Saudi Arabia on one of the
three indexes by 2010. Accomplishing
such a feat will require the complete
collaboration of both Saudi Arabias public
and private sectors, who have been asked
to join the 10x10 mission and embrace
competitiveness as a practice and
philosophy.
To this end, King Abdullah has said
that ongoing reforms, in addition to
opening several sectors for FDI, would
improve business infrastructure in the
Kingdom and increase Saudi
competitiveness. We intend to enhance,
gradually and continually, the investment
environment with the purpose of
supporting the private sector. Already,
Saudi Arabias progress toward this
milestone is impressive. The Kingdoms
National Competitiveness Center (NCC)

Vol: XXXXIV

has been charting the countrys progress,
which has risen in the World Banks Ease
of Doing Business Index from 76th to
23rd place in just three years, and is
currently the number one in the entire
Middle East. This is a considerable vote
of confidence for the Kingdoms progress
thus far. The culmination of each years
efforts has become the Global
Competitiveness Forum (GCF), which
concluded its second successful iteration
in Riyadh last January. Intense debates on
how to keep an economy at the forefront
of development were fueled by leading
experts on competitiveness, including Lee
Kuan Yew, Singapores mentor minister,
and Professor Michael E. Porter of Harvard
Business School. Many of Porters
principles, in fact, have served as
blueprints for Saudi Arabias strategic
development, including clustering and
economic cities.
In his keynote speech, the worldrenowned competition strategist addressed
the important opportunity Saudi Arabia
has in fulfilling its goal by fundamentally

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increasing access to vocational and training
programs for Saudi citizens. There is no
possibility of achieving competitiveness
without raising the culture of productivity,
said Professor Porter. He lauded Saudi
Arabias positive results over the years,
adding that support for the establishment
of small and medium enterprises as well
as becoming more active in attracting
foreign investment into non-energy sectors
was crucial for the Kingdoms continued
success.
Purposely scheduled immediately
preceding the World Economic Forum in
Davos, the GCF creates a window to the
world for the Middle Easts development
as a whole. There is no doubt that the
entire region is brimming with potential,
and if conflicts can be resolved, the
longterm economic benefits stand to reach
unparalleled heights. This is where Saudi
Arabia vies to become a role model, with
the GCF as one of the premier platforms
for communication. All eyes will be on
GCF 2009 to see whether Saudi Arabia is
closing in on this goal.n

73

Mind Wealth, The New Oil
Of all the magnanimous projects,
reforms, and improvements currently
taking place in Saudi Arabia, at the end
of his reign and beyond King Abdullah
will most likely be remembered for the
imprint he will have left on the countrys
education. Saudi Arabia is one of the
worlds youngest countries, with 75
percent of its population being under the
age of thirty. The king wants to ensure
that the millions of young Saudis safely
propel the Kingdom into the future, by
making education one of the countrys
strongest assets. In order to achieve this
goal of imparting mind wealth upon his
people, the king has invested an
unprecedented amount of funds into the
sector. No less than 25 percent of the 2008
Saudi budget, totaling a grand 105 billion
Saudi riyals ($28 billion), the largest in
its history, is being invested into education
and manpower development. Large sums
will be channeled toward technical and
vocational training as well as public and
higher education.
On top of all of this, King Abdullah
has instated a massive public education
overhaul, known as the King Abdullah
Project for the Development of Public
Education. This project will consist of
multiple phases of targeted spending,
initially totaling $3.1 billion. This is clearly
revolutionary, as no king before has
devoted so much of the countrys resources
to developing its human capital. With his
commitment to raise educations allocation
each year from now on, Saudi citizens
have now truly become the Kingdoms
largest untapped asset.
Minister of Education Dr. Abdullah
bin Salih Al- Obaid sees this period in
Saudi Arabias history as a time of great
transition. We believe that during the
time of the custodian of the two holy
mosques, King Abdullah bin Abdulaziz,
Saudi Arabia has entered a new stage of
knowledge, and knowledge was his
concern even before he became a crown
prince. The ministry is in charge of
implementing the Education Development

Vol: XXXXIV

We are facing
development
demands to transfer the
Kingdom from the current
traditional lifestyle to the
world that is based on
knowledge.
Dr. Abdullah bin Salih
Al-Obaid, Minister of
Education
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Plan that seeks to turn the country into a
knowledge-based information society. The
eighth phase of the plan was recently
rounded off with considerable rates of
success. Most of the plan goals were
achieved. Some were better than expected,
because the plan was based on certain
financial considerations. Due to the rise
of petroleum prices, the country obtained
a budget surplus, which the government
invested strongly in education and
healththerefore it is going to achieve
more than what was stipulated in the
development plan. According to Minister
Al-Obaid, the number of schools
established during the three years of King
Abdullahs reign is the same as in the
seventy years prior to his coronation.
Hence, we are facing a responding stage
for the development demands to transfer
the Kingdom from the current traditional
lifestyle to the world that is based on
knowledge.
This challenge is considerable, taking
into account the Kingdoms rapidly rising
population. The complete provision of
primary and secondary education has been
the first step in this direction, with
education being compulsory from ages
six to fifteen. Beyond that, however, the
Ministry of Education is calling upon
international investors to play a significant
role in the Kingdoms ambitions.
Companies and institutions with
backgrounds in teacher training,
curriculum development, and
extracurricular expertise are being
approached and encouraged to become
involved in Saudi Arabias transformation.

Leveraging Knowledge

There is a goal to make Saudi
educationand thus, its societymore
globally oriented. The Ministry of
Education conducted a long and thorough
survey of many countries around the world
exhibiting successful education systems.
We are trying to adopt the strengths of
each nations educational system and apply
them to improve our own, reveals Vice-

71

The establishment of (KAUST) has been a
living idea in my mind for more than 25 years.
King Abdullah bin Abdulaziz
Minister of Education Dr. Saeed M AlMullais. These include Canada, France,
Austria, Finland, and China. In addition,
the number of Saudis studying abroad has
reached record highs, largely thanks to
the decision to increase government
spending to subsidize their trips. We are
sending 10,000 students to obtain their
bachelors, masters, and PhD degrees
from abroad, says Al-Mullais.
The Kingdom has a long history of
successful cultural and educational
exchange, particularly with the United
States. A full generation of Saudis educated
in America is now in control of the
economy, and the two nations have in
many aspects been brought together by
such exchanges. However, since 9/11 it
has become more difficult for Middle
Eastern students to obtain U.S. visas, and
they are therefore attending top schools
in countries such as Canada, the United
Kingdom, Switzerland, and the
Netherlands. We believe that we should
have a global education, both inside our
country and abroad, elucidates ViceMinister Al-Mullais.
We also invite people to do their
scholarship here, not only in higher
education but even in general education.
15 percent of our students are from other

72

countries. Saudi Arabia intends to
leverage its international standing through
the creation of specialized new
universities. One such shining example is
the King Abdullah University of Science
and Technology (KAUST) next to the
Economic City in Jeddah, the first of its
kind in both the Arab and Islamic worlds.
KAUST will facilitate Saudi Arabias
position as a global hub for business and
technology by forming management and
IT skills that can be injected directly into
the Saudi economy. Through the
Universitys Global Research Partnership,
students will gain the expertise taught in
universities and enterprises of the United
States and around the world, and combine
them with Saudi-specific skills needed
throughout the market. KAUST has so far
established partnerships with Woods Hole
Oceanographic Institution (WHOI) in the
United States, Institut Francais du Petrole
in France, the National University of
Singapore, the Indian Institute of
Technology, Bombay (IITB), and, most
recently, the American University in Cairo.
Through these linkups, KAUST hopes to
compete with the worlds top faculties,
including the Massachusetts Institute of
Technology.
Speaking at the groundbreaking

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ceremony on October 22, 2007, King
Abdullah commented on the universitys
capacity to bridge cultures through the
pursuit of knowledge. Inspired by the
eternal teachings of Islam that call for
seeking knowledge, engaging in
development works, and promoting better
understanding between peoples, the
establishment of this university has been
a living idea in my mind for more than 25
years. We hope that the university carries
out its noble humanitarian message in a
pure and clean atmosphere, taking the help
of God and then that of enlightened
intellectuals all over the world, without
any bias or discrimination, he said.
The most important milestone of Saudi
Arabias education drive is the impetus
behind gender equality. Female
participation in Saudis economy is most
likely to become its greatest asset. The
World Bank may have placed education
in the Middle East below average, stressing
the need for drastic improvement, but in
its recent report on Arab education, Saudi
Arabia ranks near the top in terms of
gender parity. Women in Saudi Arabia
are getting the same access to education
as men, says Prince Dr. Khalid Abdullah
M. Al Saud, vice minister for girls
education. In terms of degrees, there are
many Saudi women who hold PhD degrees
in different fields. In terms of
empowerment, women are getting more
chances in banks, universities, hospitals,
and so forth. We would like women to be
empowered, but in the meantime,
respected. Through King Abdullah, Saudi
Arabia has become a model, because it is
utilizing modernity while protecting the
social values.n

Vol: XXXXIV

The Thriving Pulse of Saudis
Health Sector
The health sector in Saudi Arabia is
considered by SAGIA to be one of the six
pillars of the economy, and many even
believe it is the most important in terms
o f s p u r r i n g t h e e c o n o m y s
competitiveness. Regionally, it is one of
the largest in terms of size, activity, and
potential. Average annual health spending
in Saudi Arabia is $8 billion75 percent
by the government and only 25 percent
by the private sector. According to a 2007
report by Booz Allen Hamilton, an aging
but increasingly wealthy population is
seeking specialty health care treatment
from the private sector. Combined with
the sharply growing population, expected
to rise from 23 million today to 30 million
by 2016, and demand for hospital beds
increasing from 51,000 to 70,000 in the
same period, the opportunities facing the
private health sector are immense. For
international healthcare providers and
investors, the report observes, the
coming liberalization of the sector will
mean increased access to the largest
healthcare market in the Middle East, and
an exciting opportunity to help millions
of Saudis live longer, healthier lives.
Deputy Minister of Health Dr. Obaid Al
Obaid says that in order to meet this rising
demand, the ministry has engaged a plan
for building new hospitals across the
Kingdom to complement 230 already
operating under its aegis. Currently in
progress are two major hospitals in Riyadh,
one specialized hospital in Jeddah, and
one in Dammam, but Al Obaid
acknowledges that the sheer scale of these
projects calls for an active participation
from non governmental sources. We are
actually in need of the private sector to
be involved in building hospitals,
especially in the large cities. The Ministry
of Health facilitates everything for
investors who are willing to buy into the
80

hospitals and the sector overall.

Kingdom Come

Existing healthcare companies in the
Kingdom have been keen to partner with
international pharmaceutical and
healthcare providers that can impart knowhow to the local Saudi market. One such
company is Tamer Group, which evolved
from a single pharmacy founded in 1922
by Dr. Mohammed Said Tamer into a
modern Saudi enterprise. Through its deep
understanding of the industry, the
regulations, demands, and suppliers, Tamer
has attracted the likes of Sanofi-Aventis,
Bristol- Myers Squibb, and Viagra
manufacturer Pfizer to give their Saudi
business interests a big boost.
Being competitive today in health
care is a combination of things, says
Ayman Tamer, the groups president. We
work in a highly regulated industry, which
will only increase in the future, as
authorities want to ensure the quality of
health care provision. Then you have a lot

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of good experience, and with experience
comes continuity. Today there are many
international pharmaceutical companies
that wish to put their flag in the Kingdom.
They feel there are big business
opportunities and growth potential and
want to have a permanent presence here
in Saudi Arabia. Tamer therefore sees
itself as an international partners source
for competitive advantage in the
Kingdom.
The group also entered into a unique
relationship with two of the top
pharmaceutical companies in Japan,
Astellas and Sankyo, to create the Saudi
Arabian Japanese Pharmaceutical
Company, known today as SAJA. But
Tamer feels that competitiveness comes
from not only adding value to the
Kingdom, but from maximizing its export
potency and further penetrating global
markets. If you really wish to succeed,
then more is needed than just local
manufacturing and the local market,
attests Tamer. The key is in the export
of goods produced here in Saudi Arabia.n

Vol: XXXXIV

SPECIAL REPORT

The Saudi Finance Sector

Confident, Competitive,
and Compliant
The Saudi financial market as we know
it today can still be considered as being
in its infancy. Until the 1980s, capital
markets did not exist in Saudi Arabia. It
was really the creation of the Capital
Market Authority (CMA) that got the ball
rolling and paved the way for the
TADAWUL stock market, bond markets,
and even the insurance sector. Yet in just
a very short time, the Saudi Arabian
financial sector has gained sophistication
and prosperity and stands
ready to capitalize on the
unprecedented liquidity
flowing through the
Kingdom.
In this market of
extremely high potential,
many finance methods are
rapidly gaining ground. One
particularly prosperous
activity has proven to be
private equity, and no one
is showing more thrift in this
field than the Bahamdan
Group
(BG),
a
professionally governed
investment house. The
Bahamdan family name has
for a long time been
synonymous with accomplishment in
Saudi Arabia.
One of the familys major companies,
Sara Holding, has been a household name
with a regional focus, while two other
major holdings focus on Europe and the
United States. However, the group is now
set on consolidating their various interests
under the name Bahamdan, thereby
demonstrating that a family firm, the

46

historic model of success in Saudi, can be
every bit as competitive as a public entity.
When I think of competitiveness, I
think of all the young entrepreneurs with
their great ideas, says Kamal Bahamdan,
the groups CEO. It is not about the
beauty of money but the beauty of the
mind. We are seeing so many creative
people taking their ideas and starting their
own companies. Competitive companies
based on human capital are the future.

Today with all the liquidity they will find
the money to see through their initiatives.
He of all people should know. The son
of Sheikh Abdullah Bahamdan, revered
in the Gulf s business community and
who as chairman of the National
Commercial Bank of Saudi Arabia, the
largest Arab bank, was a major driving
force in the Kingdoms historic
transformation, Kamal graduated from

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Boston University in 1994 and launched
an investment platform the following year.
Against all predictions, the venture proved
extremely successful, giving Kamal a lot
of momentum. He nurtured this venture
for years, spinning off a variety of other
platforms in various sectors along the way,
each one successful in its own right.
The truly remarkable facet lies in the
fact that these investment platforms were
incubated and developed in the worlds
most competitive market,
the United States. By 2003,
when the business climate
was opening up, Bahamdan
brought the expertise and
knowledge of the venture
back to Saudi Arabia.
In essence, the group
operates in unique platforms
by clustering investments
and industries together to
provide the best possible
know-how transfer and
value-added services.
Bahamdan believes that
formula can be beneficially
applied to national
development, through
strategic investments in the
health and educational sectors, which it
feels will become some of the most
lucrative investments for the group. One
of the cornerstones of its platforms
strategy, in addition to transfer of
knowhow and identifying market trends
before anyone else, is capturing and
fostering top-notch human capital. Kamal
Bahamdan, an avid equestrian
showjumping competitor with Olympic

Vol: XXXXIV

credentials, explains that the group
has already embarked upon a
series of ventures tailored to
societal development, all the while
continuing to be a major player
in the international financial world.
Within the next five years, I
would like to see our group acting
as bridge out of the region abroad.
To b r i n g k n o w - h o w a n d
technologies from the West and
Far East to Saudi Arabia is our
goal. We are continuing to bring
people, products, and departments
from all over the world to the
region and our company.
Successes in Saudi finances have not
been limited to private equity alone. The
changing landscape of the national market
has also paved the way for new innovative
products in consumer banking. Credit
cards, for example, previously unseen in
the Kingdom, are expected to thrive as
the Saudi mentality embraces the concept
of debt. Razi Shafeek Fakih, acting CEO
of Bank Albilad, highlights this change
in the financial paradigm, making this an
opportune moment to bring about a whole
new philosophy of consumer banking to
the Kingdom.
In addition, despite an international
credit crunch, the Saudi mortgage market
is about to blossom, as a generation of
Saudi homeowners settle down. But most
see the greatest window of opportunity in
Islamic finance. Banks like Albilad have
begun to carve out a niche market for
themselves in the provision of shariacompliant banking. What I see here in
Saudi today excites me, says Fakih.
There is simply no other market which
has the potential that Saudi offers,
especially in Islamic banking.

Bold Moves

One of the fastest movers to capitalize
in this field has been Jadwa Investment.
From day one, Jadwa has had one goal:
to be one of the Kingdoms, and the
regions, premier sharia-compliant
investment houses. And since their
inception in August 2006, theyve been
highly successful at doing so. A great deal
of planning and strategy went into

Vol: XXXXIV

preparing their business model. Obviously
there is plenty of money in circulation in
Saudi Arabia, but Jadwa wanted to find
the factor that could make them stand out
from the pack, as CEO Ahmed Al-Khateeb
points out.
Everybody is running after this
market: Goldman Sachs, Morgan Stanley,
UBS, HSBC, Citigroup, and so on. How
can we differentiate ourselves? By being
a world-class domestic institution. By
that, Al-Khateeb is referring to the talent
around which his business revolves. Jadwa
has conscientiously built its organization
from the ground up around the regions
leading investment minds, which include
renowned Chief Economist Brad Bourland
and Al-Khateeb himself. In addition to
Islamic financial-compliance regulations,
an indepth knowledge of both international
and local markets is required in order to
offer the most allaround services.
Along these lines, Jadwa Investment
teamed up with the Frank Russell
Company in 2007 to aid it in reaching a
larger market and boost its shariacompliant
offerings. We look at Jadwa as a window
to the international investors when it comes
to the local financial market, comments
Al-Khateeb. If international investors
would like to invest in the equity market
and in any of the real estate projects, we
will definitely welcome this and facilitate
it. Among Jadwas boldest moves to date
was launching the first regional Sukuk
fund, or Islamic bond, one of the Gulf s
most promising markets.
This gave Jadwa unprecedented access
to the fixedincome, sharia-compliant

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investment market, which has
spawned $80 billion in Sukuk
funds in the past five years, with
$50 billion in additional funds
expected to launch this year alone.
Jadwa has also proven itself an
ideal partner of choice through a
recent purchase of ExxonMobils
30 percent stake in the Saudi
Aramco Lubricating Oil Refinery
Company (LUBEREF). Acquiring
the U.S. oil giants stake and the
resulting partnership with Saudi
Aramco thrusts Jadwa into the
forefront of Saudi business and
has given the small investment
bank credibility as a major player in the
surging Saudi economy.
Brad Bourland, considered one of
Jadwas strongest assets and the foremost
authority on the Saudi economy, believes
the infectious liberalization being
witnessed in the region today may have
created a rush on opportunities of sorts,
but there is nevertheless a well-formed
investment efficiency being maintained
by the Saudi authorities.
With almost 30 years of experience in
the Kingdom, his insight into the
diplomatic and financial worlds paints a
clear picture of where the Kingdom was,
where its at, and where it will most likely
be heading.
When I was first exposed to the
Kingdom in the 1970s, recalls Bourland,
the planning minster at that time, Mr.
Hisham Nazer, who later became oil
minister, came to the U.S. to give a speech.
He said,
We Saudis are not a wealthy people;
all we have is money. We have no roads,
no hospitals, no schools, no
telecommunication, no infrastructure
but we have a lot of money from oil
revenues. The challenge was to turn out
that money into real economic activity
and development. I think now, 30 years
later, there is a realization that oil revenues
do not serve as an economic model. I think
the combination of globalization, market
liberalization, and participation of foreign
investors will really maximize the potential
of this country.n

75

The Saudi Finance Sector

Confident, Competitive,
and Compliant
The Saudi financial market as we know
it today can still be considered as being
in its infancy. Until the 1980s, capital
markets did not exist in Saudi Arabia. It
was really the creation of the Capital
Market Authority (CMA) that got the ball
rolling and paved the way for the
TADAWUL stock market, bond markets,
and even the insurance sector. Yet in just
a very short time, the Saudi Arabian
financial sector has gained sophistication
and prosperity and stands
ready to capitalize on the
unprecedented liquidity
flowing through the
Kingdom.
In this market of
extremely high potential,
many finance methods are
rapidly gaining ground. One
particularly prosperous
activity has proven to be
private equity, and no one
is showing more thrift in this
field than the Bahamdan
Group
(BG),
a
professionally governed
investment house. The
Bahamdan family name has
for a long time been
synonymous with accomplishment in
Saudi Arabia.
One of the familys major companies,
Sara Holding, has been a household name
with a regional focus, while two other
major holdings focus on Europe and the
United States. However, the group is now
set on consolidating their various interests
under the name Bahamdan, thereby
demonstrating that a family firm, the

74

historic model of success in Saudi, can be
every bit as competitive as a public entity.
When I think of competitiveness, I
think of all the young entrepreneurs with
their great ideas, says Kamal Bahamdan,
the groups CEO. It is not about the
beauty of money but the beauty of the
mind. We are seeing so many creative
people taking their ideas and starting their
own companies. Competitive companies
based on human capital are the future.

Today with all the liquidity they will find
the money to see through their initiatives.
He of all people should know. The son
of Sheikh Abdullah Bahamdan, revered
in the Gulf s business community and
who as chairman of the National
Commercial Bank of Saudi Arabia, the
largest Arab bank, was a major driving
force in the Kingdoms historic
transformation, Kamal graduated from

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Boston University in 1994 and launched
an investment platform the following year.
Against all predictions, the venture proved
extremely successful, giving Kamal a lot
of momentum. He nurtured this venture
for years, spinning off a variety of other
platforms in various sectors along the way,
each one successful in its own right.
The truly remarkable facet lies in the
fact that these investment platforms were
incubated and developed in the worlds
most competitive market,
the United States. By 2003,
when the business climate
was opening up, Bahamdan
brought the expertise and
knowledge of the venture
back to Saudi Arabia.
In essence, the group
operates in unique platforms
by clustering investments
and industries together to
provide the best possible
know-how transfer and
value-added services.
Bahamdan believes that
formula can be beneficially
applied to national
development, through
strategic investments in the
health and educational sectors, which it
feels will become some of the most
lucrative investments for the group. One
of the cornerstones of its platforms
strategy, in addition to transfer of
knowhow and identifying market trends
before anyone else, is capturing and
fostering top-notch human capital. Kamal
Bahamdan, an avid equestrian
showjumping competitor with Olympic

Vol: XXXXIV

Saudi Post
From the postal command center
in the heart of the Saudi Posts
headquarters in downtown Riyadh, all
eyes are focused on the massive
projection screen and illuminated
trajectories showing each Saudi Post
truck as it goes about its day-to-day
deliveries. And while each blinking
icon may not individually seem like
a driver for economic growth, together
they represent the nuts and bolts of one
of the most sophisticated postal systems
in the world. From his upstairs office,
Dr. Muhammed Benten, CEO of the
Saudi Post, smiles in recognition of
just how much he and his team have
accomplished in the past few years, and
what this will bring to the nation in general.
You cannot imagine having a
prosperous country with investment and
big corporations without a successful and
efficient postal infrastructure, says
Benten. Yet, as Benten can attest, the
creation of an efficient, modernday postal
system is easier said then done, especially
considering the fact that, until recently,
the Kingdom was largely unaddressed.
Jokes Benten, When you wrote your
address, you really described to someone
how to get to your home! Add to this the
dilemma of a multilingual demographic
and inconsistent spellings of Arabic names
in Latin letters, and the task of modernizing
Saudi Arabias postal service becomes
that much more difficult. Yet, undeterred
from his objective, Benten assembled a
team of global technological leaders with
which to partner, including Cisco Systems
and Saudi Arabias own National
Technology Group (NTG). Through such
collaborations, Saudi Post has been able
to forge one of the most elaborate
technological backbones for postal
delivery anywhere in the world.
We were inspired by a number of
factors, including a standard and numbered
address, which we think are very essential
for competitiveness of the country and
security of the country. We need a high-

82

tech system whereby all documents or
parcels are accounted for at all times,
notes Benten. The solution to this demand
proved to be a comprehensive GPS grid
system, pioneered in Saudi Arabia,
whereby each address in the Kingdom
corresponds to a unique coordinate. It is
a regular grid with natural boundaries,
explains Benten. A lot of mapping and
cartography have obviously gone into this.
However, you will never be mistaken
if you follow the rules. We are the only
Arab country that has an active navigator
that can pinpoint a house. To maximize
this systems efficacy, each Cartesian
address is likewise paired with a GPSenabled smart mailbox, which syncs with
each postman as he makes a delivery and
offers instantaneous delivery notification.
With this cuttingedge technology in place,
Saudi postmen are able to receive each
days deliveries on their equipment with
a preprogrammed delivery itinerary that
notifies them as the truck approaches the
parcel destination.
Beyond routine parcel delivery,
however, the Saudi GPS mapping system
has strong commercial implications. With
such comprehensive coordinate data
already compiled, the Post now sits atop
a wealth of information that can translate
into higher efficiency in the deliveries and
services sector. Benten is quick to note

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the Posts collaboration with Pizza Hut,
where pizzas are delivered to digital
housing numbers, as an example of
this projects commercial viability. Yet
the Posts overhaul of Saudi logistics
goes far beyond smart mailboxes and
GPS grids. As Benten describes, the
role of tomorrows postal service
provider is not simply delivering
parcels but integrating with the
electronics age. It is here that Bentens
collaborations with Bill Gates and
Microsoft have borne fruit, providing
every citizen in the Kingdom of Saudi
Arabia with a unique, postal-specific
email address. Benten and Gates are
betting on the inbox becoming the new
mailbox and are already exploring ways
to take advantage of this unprecedented
technological leap forward. One such
venture Benten has launched in
collaboration with the Saudi Research and
Marketing
Group (SRMG) has been Shaher, an
innovative directmail company that has
its sights set on leveraging this delivery
mechanism to maximize promotional
exposure to opt-in recipients. In this
delivery model, relevant JPEG-formatted
promotional materials can be sent to the
inboxes of willing clients, who can then
agree or disagree to receive further
materials and samples via post. The result
is a highly targeted and cost-effective
marketing platform, with significant
environmental implications.
Such advances in conventional postal
services have not, of course, gone
unnoticed, and Saudi Post has received
the top accolades of the worlds postal
community, placing first in postal social
responsibility and second in outstanding
postal services in 2007. We have been
very fortunate, says Benten, while adding
that the real competitiveness of the Post
is in its partnerships.
We have future projects and we work
with winners, exclaims Benten. The sky
is the limit!n

Vol: XXXXIV

Powering the Kingdom of Energy
That Saudi Arabia produces much of
the worlds energy will surprise no one.
That Saudi Arabia is actively seeking the
worlds energy expertise is quite another
story. Having pegged the energy sector as
one of three priority sectors of strategic
importance to the future of the Kingdom,
the Saudi Arabian General Investment
Authority (SAGIA) has enlisted the help
of the global private sector, once
discouraged from participating, to aid the
Kingdoms energy development and drive
economic growth in the Kingdom of
Energy. The response to this call has been
an energy-sector capital projects bonanza
throughout the Kingdom, in everything
from petrochemicals to fertilizers, to the
tune of $80 billionmusic, surely, to the
ears of SAGIAs governor, Amr AlDabbagh. Yet apart from investments
flowing downstream toward
petrochemicals, ARAMCO refining
capacity upgrades, and a massive new
aluminum development in Ras Az Zawr
by Maaden, the nations supercharged
mining company, perhaps the most
dynamic subsectors at play in Saudi are
the power and water supplies.
After decades of underinvestment, the
Kingdom of Saudi Arabia is now facing
an unprecedented spike in both water and
power demand due to both a rapidly
expanding population and sharp industrial
expansion (ARAMCO alone predicts a 50
percent rise in power usage in just a fiveyear span). Nationwide estimates
published in the 2007 Saudi Arabia Energy
Review Report (SAERR) predict demand
for both water and power to increase at 6
percent per annum, highlighting the need
for large-scale investments, but also
forecasting high returns for investors
noting those companies with access to
reliable technology and excellent project
management and operational skills will
tend to have an edge in the development
of the sector. And it is here, at the junction
of technology, management, and
operational prowess that the countrys
most successful water and power company

78

has found its niche. Forged in joint venture
by Saudi giants Abdullah Abunayyan
Group, A.K. Al Muhaidib & Sons, and
Al-Rajhi Groups investment vehicle,
MADA, ACWA Power Projects has been
the most successful developer of the
nations Independent Water and Power
Project (IWPP) program in capitalizing
upon the rapidly liberalizing regulatory
environment in the sector.
But Mohammad Abunayyan, chairman
of the ACWA Power Projects and
representative of Abunayyan Groups
water industry expertise, insists that despite
its unprecedented recent success in
winning four consecutive major project
bids and meeting demanding project
deadlines, the company has a long-term
approach to its business model. If we
were interested in high returns we would
look into other areas like real estate, quips
Abunayyan.
This is high risk and requires a longterm commitment. But risk or not, Mr.
Abunayyan and President and CEO Paddy
Padmanathan have set an enviable example
of competitiveness in developing privately
financed power and water projects, for
both the Kingdom and the power markets
beyond. The real mission is to localize
the knowledge and the know-how and to
be able to absorb the knowledge from the
international arena, explains Abunayyan.
This translates into the competence and
capability of the company and its ability

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to match any other professional
international company. Both men further
point to the companys innovative
approach to project development as critical
to their success.
You have to have something out of
the box, whether it is a financial structure
or a technical solution to be credible
and challenging. It is exactly how we have
been able to be competitive and be able
to provide winning bids four times in a
row. Now managing the development of
all four projects valued at more than $9.1
billion and adding upwards of 4,855
megawatts into the Kingdoms power
capacity and 220,000 cubic meters per
day of desalinated water, the extent of the
companys competitiveness is beginning
to show. Yet Abunayyan feels that the true
value of being the nations most
competitive IWPP is not in winning bids
but in enhancing Saudi energy
competitiveness, with knock-on effects of
bolstering employment, innovation, and
international partnerships in the Kingdoms
energy sector. Abunayyan draws upon
each of these points in his call for attracting
the worlds top talent as future partners
in the companys long-term vision, which
encompasses both global expansion and
alternative energy sources. This is our
countrywe know what to do, says
Abunayyan confidently. Saudi Arabia
exudes energy competitiveness of anything
energy related.n

Vol: XXXXIV

Hajj 2010:

The eye witness
account By Prof. S.B. Hassan
" If Allah has ordered you, then Allah will
not let us down"
Hajj revolves around this Abrahamic
commitment to divine orders. As Hajra
frantically was looking for water, she ran
between two massive rocks 7 times, by
the time she finished the 7th run, her little
baby was screaming
Ibrahim(A.S) and his son Ismail(A.S)
built the Kabba, and was ordered to call
for prayer in the middle on nowhere. Allah
said in the Quran 22:27 "proclaim to mankind the Hajj (pilgrimage). They will come
to you on foot and on every lean camel,
they will come from every deep and distant
(wide) mountain highway (to perform
Hajj)."
Today, from every far corner of the
globe, humans enter in the state of Ihram
as they enter the city of Mecca, all men
wear the two white sheets, status is gone,
wealth is not noticed, race is diminished,

As long as a Muslim is breathing
he/she has to pray 5 times a day. It does
not matter what condition we are in, we
have to humble our self and face Our
Creator. We also have to fast Ramadan
once a year, but when it comes to Hajj,
its only once a lifetime, fardh (obligatory)
for everyone who possesses means prescribed by Islam.
Hajj is the fifth pillar of Islam. It is
an order to travel a long way to reach a
city in the middle of mountains surrounded
by desert. Where thousands of years ago,
Prophet Ibrahim(A.S) was asked by Allah
to take his wife Hajra(A.S) along with his
only son Ismail(A.S) and leave them right
there in the middle of nowhere. Hajra(A.S)
with astonishment asked Ibrahim(A.S) as
he turned his back to her in the middle of
the deserted mountains if this was a divine
order, he shook his head as a yes and
moved on. Hagar said her famous saying,

44

what prevails is this intrinsic humanity
value in the millions around. In Ihram
state, a muslim cannot hurt anything, not
an ant, not a fly, cannot pull a leaf out of
its tree, he/she cannot push a human, or
talk in vain. Muslims cannot hurt anything
that lives. This is the true state of a Muslim.
Hajj is to see this solidarity from China
to America to Russia down to South Africa. all over the world, people humble
themselves and come answering the call
of Allah through Ibrahim(A.S). To see this
commitment this solidarity of the followers
of La Ilaha Illa Allah (no God but one), it
makes ones heart glitter, it makes one's
eyes run like raining sky, it makes your
thoughts deep and beautiful. It makes one
a true human with feelings, with emotions,
with remembrance of Allah at all times.
It's a feeling that words fall short to describe, Nationality is forgotten; it is only
a simple man marching with one identity,

For my international travel during the calendar
year, I had never planned to go for Hajj in the year
2010.It was like a miracle that I received the
invitation from the ministry of interior of the Royal
Kingdom of Saudi Arabia in Islamabad through
the diplomatic channels of the Royal Kingdom of
Saudi Arabia in Islamabad and they connected me
H.E. Mr. Abdul Aziz Bin to the Consulate General of Saudi Arabia in Karachi.
H.E Mr. Faleh
Ibrahim Al Ghadeer
The Invitation was during the last week of Hajj Mohammed Al- Ruhaily
flights leaving from Karachi for Jeddah. All the
travel papers were processed so swiftly that I could not believe. I was invited to
collect the necessary documents only three days before the flight of Saudi Arabian
Airlines from Karachi.
I acknowledge grateful cooperation and
guidance given by the office of the Ambassador
of Saudi Arabia: in particular the assistance given
by Mr. Saleh Hmuod Almughiri, Director
Information Section, Royal Embassy of Saudi
Arabia. Brother Mughiri gave his telephone contact
to be used at all times required during the journey
Mr. Saleh Hmuod
Mr. Obaidullah
to perform Hajj. I owe grateful thanks to the Consul
Almughiri
Alharbi
General of Saudi Arabia, H.E Mr. Faleh
Mohammed Al- Ruhaily stationed in Karachi and his Vice Consul Mr. Obaidullah
Alharbi, who looked after the minute details to make Hajj travel smooth and
comfortable.
www.iandm.pk

Vol: XXXXIV

SPECIAL REPORT

Landing at Jeddah:-

When the Saudi Arabian Airlines Flight number 0715 on 10th November 2010
landed in Jeddah at 11:15 there was a car with a chauffeur and another escort waiting
at the doorsteps of the aircraft to receive me and transport me to the Hotel after
fulfilling all the immigration formalities. I was in the state of Ihram right from the
time I left my house with the Niyat(Intention) of Hajj therefore I was taken to Mecca
to perform the First Umrah after which I got out of Ihram.
The stay at Mina was organized by the volunteers of the ministry of Interior who
remained all the time with me and other such guests from other countries, providing
the facilities.

Arrangement During Hajj:

Under the policy, directives and guidance of HRH Prince Naif
Bin Abdulaziz, the arrangement of movement of the ocean like
heads of pilgrims were made so smooth and efficient that no where
on the globe one would find a similar flawless event taken place
with peace and spiritual satisfaction.
One can never find anywhere in the world supply of food and
water, arrangement of sanitation and hygienic conditions, transportation and security
made so efficiently for more than 4 million human beings(pilgrims).

The Metro Light Rail
Experience:

Special mention has to be made of the Metro Light
Rail which has been made operational for the first
time during the Hajj 2010.I was among the fortunate
pilgrims to have used the Metro Light rail going from
Mina, Arafat and Muzdalifah. The travel through the
rail was really enjoyable and very significantly resulted
in saving travel time between Mina, Arafat and
Muzdalifah. One may recall that the travel time from
Mina to Arafat and Muzdalifah used to take many
hours which has been reduced to nearly 45 minutes
and it's the oneness of the Creator.
The highlight of Hajj, is when all the
people gather in the plain of Arafat, millions and millions, start moving by sunrise
to Arafat, and leave it by sunset. This is
the most emotional day of Hajj, where the
Prophet(P.B.U.H) stood up, raised his
hands and prayed all day. That's what you
see people do, everyone takes a corner,
by a tree, under a tent, by an umbrella and
prays. You cannot help but to hear the
cries, Muslims from everywhere: from
Pakistan, from China, from Nigeria, from
the Arab countries, from Russia and Europe, the humans... you cannot help but
to notice humanity crying. All the pilgrims
raising their hands, asking for mercy, for
love, asking for forgiveness, for guidance.
46

It's said that Allah, will descend close
to Arafat to hear the pleas of his human
creatures. Approximately more than four
million pilgrims performed Hajj.
I joined the standing millions
raising their hands to the sky and
prayed. Hundreds of languages
were spoken, hundreds of races,
of nationalities are all equal now
and all crying.
The pilgrims then move and
camp in Mina for three days, with
every day the pilgrims gather
around the symbol of Satan and
stone it. It's a reminder to all the
people that we are all brothers
and sisters, and that the enemy
is Satan. It said that as Ibra-

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him(A.S)was ordered to slaughter his son
Ismail(A.S), Satan came to him in the
shape of an old man telling him how horrible it is to do so Ibrahim(A.S) took some
stones from the ground and threw it at
Satan. The pilgrims mimic that in the last
three days.
After the stoning of the Satan, the
pilgrims perform animal sacrifices, to
symbolize God having mercy on Ibrahim(A.S) and replacing his son with a
ram, which Ibrahim(A.S) then sacrificed.On this or the following day the
pilgrims re-visit the Masjid al-Haram
mosque in Makkah for another tawaf, to
walk around the Kaaba. This is called the
Tawaf az-Ziyarah or Tawaf al-Ifadah, an
obligatory part of the Hajj.The night of
the 10th is spent back at Mina. On the
afternoon of the 11th and again the following day the pilgrims must again throw
seven pebbles at each of the three jamarat
in Mina. Pilgrims must leave Mina for
Mecca before sunset on the 12th. If they
are unable to leave Mina before sunset,
they must perform the stoning ritual again
on the 13th before returning to Mecca.
Finally, before leaving Mecca, pilgrims
perform a farewell tawaf called the Tawaf
al-Wida. 'Wida' means 'to bid farewell'.
Isn't it beautiful when you see humanity
at its basic. Away from the material,
stripped out of identity, stripped out of
status, away from the so called "valuable
material world"
At the end of Hajj, something always
happens, no matter what time of the year
it is, no matter what season it is, at the
end of Hajj, the sky pours down, and it's
such a beautiful rain.n

Vol: XXXXIV

I&M Acknowledges
The Friendship and Support of H.E. Mr. Faleh Mohammed Al-Ruhaily,
Consul General, Royal Consulate General of Saudi Arabia in Karachi

SWISS named Best
Airline in Western Europe
Swiss International Air Lines has been voted "Best
Airline - Western Europe" in this year's Skytrax World
Airline Awards. The distinction is based on the latest
annual survey of several million air travellers conducted
by the UK-based Skytrax consultancy.
The 2011 Skytrax poll to determine the world's best air carriers extended to
travellers from over a hundred countries. Once again, SWISS scored top marks for
the quality of its services in the air and on the ground.
"We are delighted to receive this award, because it demonstrates to us that our
product and service strategy is well appreciated by our customers," said Frank Maier,
Head of Product & Services at SWISS, accepting the distinction during today's
awards ceremony at Le Bourget, where the Paris Air Show is currently being held.
"We aim to provide our customers with a travel experience that is as pleasant, smooth
and seamless as possible, with consistently high-quality service on the ground and
in the air. And we will carry on doing everything we can to offer our travellers
continually high quality standards."
SWISS previously earned the title of "Best Airline: Europe" for both short- and
long-haul services in the 2009 Skytrax awards. The carrier was also named number
one in Europe for "Staff Service Excellence" in the 2010 Skytrax poll.n

JS Bank launches Visa Debit Card
JS Bank Limited, one of the fastest
growing banks in Pakistan, announced
the launch of its JS Bank Visa Debit
Card in a ceremony held at JS Bank
head office, Karachi, says a press
release. Kalim ur Rahman, President
& CEO, and Kamran Jafar, Group
Head Retail Banking, were present on
the occasion along with the senior
management of the Bank.
While speaking, Kalim ur Rahman
said, "We chose Visa as our strategic
partner because they have an unmatched suite of payment products that would allow
our customers to pay securely and conveniently for every type of purchase. Visa Debit
makes an important contribution to enhancing our relationship with our valued partner."
With the launch of JS Bank VISA Debit Card, the Bank brings its clients yet another
benefit of alternate payment mode to cash when making purchase at thousands of
Point of Sale (PoS) terminals across the country, millions of merchant outlets and over
1.6 million ATM's across the globe. The facility will simultaneously allow JS Bank
customers to access their accounts through its diversified network of ATMs and pay
conveniently at thousands of merchant outlets with no need for cash or cheque.
Group Head Retail Banking Kamran Jafar said "JS Bank's progressive approach
to banking is reflected in our wide array of banking products and services and we are
providing premier services at an affordable cost to our customers, along with the
security of banking with a truly committed organisation. Under our new vision plan,
JS Bank is in the process of building an extensive branch network and a broadened
product suite to provide the very best of banking experience."n
84

www.iandm.pk

Emirates
summer surprise
for children
Emirates Airline, the Dubai based
international airline, has launched its
summer bonanza offer "Summer Smiles
in Dubai" offering families with children
under 12 years an incredible offer while
they visit Dubai this summer.
Passengers who book a three-night
package with select hotels in Dubai
between 14th May and 30th September
2011 can have up to two children under
the age of 12 years to fly at 50 percent
off the adult fare while their stay, meals
and play in Dubai is absolutely free when
travelling with two paying adults. The
Summer Smiles in Dubai package
comprises a three-night stay for two
adults and two children including the
visa cost for the children. The visa costs
for the two adults are not part of the
package.
Moreover, the two children will have
free entry to a wide range of Dubai's
most exciting attractions and free rides
on the Dubai Metro, ensuring an action
packed family vacation.
This offer also comprises Meet &
Assist at Dubai International Airport,
return airport transfers (seat in coach),
as well as hotel taxes and service charges.
Summer Smiles in Dubai is valid for all
passengers flying on Emirates to Dubai
or beyond.
Speaking at the occasion, the
Emirates Vice President for Pakistan and
Afghanistan, Badr Abbas said: "Emirates
prides itself in designing innovative travel
solutions for its customers to help them
keep discovering. Our summer vacation
offers for Dubai have been met with
resounding success year on year within
Pakistan, and we are excited at being
able to bring the offer again to Pakistan
this time around. We look forward to
helping families enjoy their summer
break, starting from their journey onboard
Emirates." He further added: "UAE,
especially Dubai, remains a key travel
destination for Pakistan".n
Vol: XXXXIV

COMPANY NEWS

Nasair announces launch of new flights to Karachi,
Pakistan
Nasair, the low fare airline based in Saudi Arabia,
recently announced the launch of new flights to Karachi,
Pakistan. The airline will operate daily scheduled flights
from both Riyadh and Jeddah airports. These flights will
go on sale for an introductory price of SAR 499 inclusive
of taxes. The addition of Karachi to the nasair route
network will bring the number of nasair's international
destinations to 19 cities.
The flights will accommodate the growth in demand
from Pakistani expats living and working in Saudi Arabia.
Moreover, with the Hajj season rapidly approaching for
the year 2011 this critical route expansion will help serve
the nearly 200,000 pilgrims who fly to Saudi Arabia from
Pakistan every year. The routes will be flown by nasair's
modern, comfortable Airbus A320 aircraft.
Simon Stewart, CEO says, "We are proud of our commitment to being the smart choice for passengers throughout the
MENA region and beyond. By adding this new destination, we intend to efficiently serve the Pakistani businessmen, executives,
families and workers living in Saudi Arabia. We also hope to offer Saudi business people more travel options for reaching
expanding markets in Pakistan."
To better service travelers between the two countries, nasair has introduced seven direct flights between Jeddah and Karachi
each week and seven direct flights between Riyadh and Karachi per week. Turki Abdullah Al Jawini, Director of Sales
comments, "The nasair team is proud to represent the 'Smart Airline', catering to the needs of the domestic, international,
business and religious tourist alike. We recognize that our passengers want to plan their trips in advance to take advantage
of our 'book early and pay less' model." Mr. Al Jawini also underscores that alongside its advancing route map, nasair will
be offering its customers a redesigned website with more advanced features and capabilities and remains committed to its
strong promotions and revamped social media.n

Chevron Issues
2010
Corporate
Responsibility
Report
Chevron Corporation (NYSE:
CVX) achieved its safest year in
company history, reduced its total
energy consumption by 33 percent
compared with 1992 levels,
invested $197 million in
communities around the world,
and spent more than $2 billion
with small U.S. businesses,
according to the company's 2010
Corporate Responsibility Report.n

Vol: XXXXIV

Hilton Pharma's donation
Abdul
Kader
Jaffer,
Chairman/CEO Pakistan Japan
Business Forum, led a three-member
delegation comprising of Sardar Yasin
Malik, Chairman Hilton Pharma, and
Shahbaz Malik, President & CEO, and
called upon the Consul General of
Japan, says a Press release. Sardar
Yasin Malik presented a cheque of
Rs10,64,000 on behalf of Hilton
Pharma. Chairman Hilton Pharma
prayed that Japan would soon recover
from damage done due to tsunami and
earthquake.
Malik assured the Consul General
that Pakistan and its people would always support Japan and its friendly people in time of
their need. Moreover, he appreciated the support Japan and its people have always given to
Pakistan and its people. Japanese Consul General Masaharu Sato thanked the Chairman PJBF
and Sardar Yaseen Malik for donation.n

www.iandm.pk

65

COMPANY NEWS

Make A Wish Foundation Pakistan joined hands with
PIA for granting the wish of the ailing child to be a Pilot
Make A Wish Foundation Pakistan in collaboration
with PIA granted the wish of Muhammad Usama, 10
years old suffering from kidney disease (Renal Failure)
who wished to be an Aeroplane Pilot. The Managing
Director of PIA Capt. Nadeem Khan Yousufzai
decorated the wings of Pilot to the ailing Usama who
was looking very excited wearing a PIA Captain's
uniform at a ceremony at PIA Head Office Karachi
on Tuesday, 31st May 2011. The young Pilot was given
practical Pilot's training in Flight Simulator..
PIA M.D. Capt. Nadeem Khan Yousufzai lauded
the works of Make A Wish and in his speech he said
that PIA will extend its cooperation to Make A Wish
Pakistan to fulfill the wishes of ailing children who
wishes to travel by aeroplane. President Make A Wish
Pakistan, Mr Ishtiaq Baig thanked PIA for granting
the wish of USAMA and became the youngest Pilot
of the country.
The ceremony was also attended by other senior
PIA officials, Make A Wish children and Volunteers.
Muhammad Usama will join PIA flight crew to Islamabad on Wednesday along with other three Make A Wish children
whose cherished wishes are to travel by aeroplane.n

Workshop on "Ensuring Personal Success and
Realizing Corporate Dreams" held
The Centre for Change held a very well attended workshop on the topic of " Ensuring Personal Success and Realizing
Corporate Dreams" at a local hotel recently in Karachi. The participants represented various renowned corporate sector
organizations. The workshop included a number of activities for participant's active involvement in the entire process of
building self esteem and learning about creation of "Hope and Happiness in a challenging environment".
Mr. Najam Ali, C.E.O, Next Capital, spoke about his experience of establishing Next Capital and C.D.C. He explained to
the audience how he overcame several difficult situations and defeated various odds and achieved success in the face of stiff
resistance. He mentioned to the participants that his success in his various ventures could be attributed to disciplined hard
work, adherence to strict merit and tenacity.
Mr. Shahid Ghaffar, CEO of Habib Asset Management Company also shared his experiences. His advice to the participants
was that work with honesty of purpose and full commitment which would lead to success and dream realization. He narrated
different inspiring episodes which required meticulous planning, execution and intense follow-up. He said that any dream
could be turned into reality provided one was prepared to invest in it personally.
Mr. Firasat Ali, Chief Executive, Centre for Change in his talk and presentation to the participants outlined the road map
to success and in this context discussed the importance of "Passion", "Energy", "Commitment", "Imagination", "Bonding
Power" etc. He also explained how to take the maximum output from the mental faculties and harness them successfully with
the external environment.
He mentioned to the participants that to enhance the courage muscle the pain threshold had to be further developed. He
also said that role modeling was critical to achieve higher objectives. The participants applauded and appreciated the efforts
of The Centre for Change for holding such a useful and successful workshop. The company plans to hold workshops in Lahore
and Islamabad as well as in Karachi on a regular basis. n

86

www.iandm.pk

Vol: XXXXIV

COMPANY NEWS

Etihad, Bank
Alfalah hold
competition
Etihad Airways and Bank Alfalah
have conducted an competition where
big rewards were given to customers in
Pakistan. The top prize comprised of a
Free Air-Tickets along with Free Stay
at the Crystal Hotel in Abu Dhabi. Sohail
Qureshi was declared the winner of this
contests top prize. Other prizes included
10,000 Etihad Guest Miles to each of
the 5 lucky winners. Etihad Airways'
Country Manager in Pakistan, Amer
Khan said response from the customers
was really tremendous and it has inspired
us to continue creating such rewarding
offers in collaboration with the
prestigious Bank Alfalah of high
repute.n

PQFT declares surplus for
BancaTakaful participants
The Pak-Qatar Family Takaful (PQFTL) has declared a
surplus of 48 percent of Takaful Donation for its BancaTakaful
customers for the financial year ending 2010.
This was announced by the Chief Executive Officer of
PQFTL, P Ahmed here on Monday.
He said that the surplus, an inherent benefit of Takaful, is calculated on the amount
available in the Waqf Fund after paying off all claims and meeting all expenses for
the year.
The company will share the surplus amount with Individual Takaful participants
on the basis of their contributions to the Waqf Fund.
`The provision of surplus makes Takaful equitable and financially more viable as
compared to the conventional insurance system. We are the first Takaful company in
Pakistan to declare a surplus on their BancaTakaful product', Ahmed said.
PQFTL has distribution agreements in place for its BancaTakaful products through
premier banks such as Standard Chartered Bank, Dubai Islamic Bank, Albaraka Bank,
Dawood Islamic Bank, MCB Bank, Faysal Bank and Bank Alfalah. PQFTL is the
largest provider of BancaTakaful in Pakistan.
FWU Global Takaful Solutions based in the Dubai International Financial Centre
(DIFC), is the technical partner in PQFTL's BancaTakaful product and is also one of
the strategic shareholders in PQFTL. FWU is the premier facilitator of BancaTakaful
products in Saudi Arabia, the UAE, Kuwait, Malaysia and Pakistan.n

The Board of Directors of Silkbank announced a profit before tax of Rs 157 million
in the first quarter of 2011. President and CEO Silkbank, Azmat Tarin presented the
accounts in the meeting. This was a complete turnaround for the Bank as a loss of Rs
407 million was registered in the same period last year. Silkbank also made substantial
gains in the Gross Revenue numbers for Q1 2011 registering a total of Rs 719 million
vs Rs 290 million for Q1 2010, reflecting a growth of 148 percent for the period.n

Bahrain's National carrier Gulf Air's
key functional area, the Services
Division, recorded significant progress
following its formation one year ago.
The division, the first of its kind in any
airline in the Middle East/Asia, was
established to focus on improving all
aspects of a customer's experience and
to deliver consistent services - both on
the ground and in the air. n

Vol: XXXXIV

The 6th NJI Annual Sales Conference held in Karachi

www.iandm.pk

87

COMPANY NEWS

Increase in Pakistan's
Export to Germany
Pakistan`s exports to
Germany increased by 23
per cent during 2009-10
and overall trade volume
between two countries
rose by over 11 per cent
with the trade balance shifted in favour of
Pakistan. This was stated by Pakistan
German Business Forum (PGBF) President
Saifuddin N Zoomkawala, while
presenting the annual report of the forum
at its second annual general meeting held
recently in Karachi, He said that Germany
is Pakistan`s fourth largest and the biggest
European trading partner.n

KESC introduces bill
payment convenience
for customers
The Karachi Electric Supply Company
has made alternative arrangements for
payment of monthly electricity bills for
those customers who have not received
physical bills around their usual due date,
given interruptions caused in the regular
process by the union miscreants.
The KESC has developed this system
as a supplementary support to facilitate
the customers who might not receive their
monthly printed bills before due date
because of the union miscreants blocking
distribution of bills and attacking the
utility's bill distributors. At several places
the union miscreants snatched and tore up
the customers' bills that the distributing
personnel had taken to deliver in different
localities. At the same time, the newly
devised methods of bill payment would
also remain as permanent support feature
of the KESC to receive bills through these
channels in normal circumstances in future
as well if the customers may find it
convenient.
The KESC has drawn five easy
methods for the convenience of customers
which will be available henceforth besides
the normal way of using printed bills.n
88

Mr. M. Yahya Polani, giving the token of appreciation to Mr. Raheel
Ahmed, General Manager Airblue at the time of his courtesy meeting
with TAAP members recently. The other prominent TAAP members
in the picture are Haji Yusuf, Anwar Rasheed, Hanif Dossani &
many others

Mr.M. Yahya Polani, giving the token of appreciation to Mr. Tareq
Alkhalil, Commercial Manager Flydubai at the time of his courtesy
visit meeting with TAAP members recently. The other prominent
TAAP members in the picture are Haji Yusuf, Amin Wali Mohammad,
Raees Ahmed Siddiqui, Naeem Sharif & many other
www.iandm.pk

Vol: XXXXIV

COMPANY NEWS

PTCL to invest Rs16 b in next five years - Walid
Pakistan Telecommunications
Company (PTCL), would invest about
Rs16 billion in telecommunications
sector in next five years in Pakistan ,
this was stated by the Managing Director,
PTCL Walid Irshad.
Addressing a luncheon meeting at
Korangi Association of Trade and
Industry (KATI), Irshad said that PTCL
is going to introduce super-speed internet
very soon in Pakistan and it would be
started from Korangi Industrial Area
He said that the era of conventional
telephone exchanges is now over and
most modern exchanges would now be installed in Pakistan. He
said that first ever new generation telephone exchange would
be introduced in Karachi He said that PTCL has already
minimized the subscribers' complaints and with the introduction
of new services and new generation telephone exchanges, the
complaints would become nil.
He said that PTCL is not being run just as Phone Company
but as an investment-oriented company which is striving hard
to introduce most modern telecommunications services.
The Chairman, KATI, Syed Johar Ali Qandhari said in his
welcome address that telecommunications plays vital role in
trade and industry and PTCL has improved its performance over
the years. He however said that sometimes industrialists face
hardships in broadband and internet which needs to be improved.

He said that PTCL should set up a full-fledged cell at KATI so
that subscribers' woes should be addressed.
Former Chairman, KATI, Mian Zahid Husaun said on this
occasion that there was revolution in telecommunications' sector
in Pakistan over the last one decade and PTCL has played a vital
role in the spread of telecommunication technology.
He said that though complaints of the PTCL's subscribers
have become insignificant however, the mindset of lower level
employees needs to be changed so that PTCL would be able to
address the subscribers' complaints in a real manner.
The Vice Chairman, KATI, Shahid Javed Qureshi pointed
out that PTCL's latest product EVO 9.3 is having signal problems
in some areas of Karachi while charges are so high as compared
to other companies' services.n

Marriott Hotels refers all
employees as associates as a
symbol of respect

Marriott Hotels has established so many best practices in its
properties across the world that Rajeev Menon is hard-pressed
to replicate them all in the regions he heads. The area vice
president for India, Malaysia, Maldives & Pakistan, Menon has
had to pick and choose and says, "I wish I could have picked
up on all the best practices. For the time being, we've concentrated
on those we thought might be most relevant," he says.
One of Marriott's best known practices is to refer to all
employees as 'associates', which is a symbol of the respect with
which the hospitality chain treats its staff. It also has a practice
called 'Fresh Eyes', a forum where the HR head of properties
invites all new associates to share their experience of their first
30 days at the hotel. Their feedback is then shared with department
heads and it serves as a tremendous boost for the young trainees.
Or as one young associate says, "All my thoughts are valued,
which really makes me proud."n

Serena Hotel responds to
local heritage and crafts
through contemporary
design language
The Serena Hotel represents the ideology of the client, The
Agha Khan, who has been an exponent of local heritage and
enrichment of the local crafts through new design challenges
and opportunities.
The Serena hotel buildings in Asia and Africa have been able
to reflect the sensibilities of their respective locations and have
been sympathetic to historical and cultural aspects through their
unique expressions.
The hotel in Islamabad posed a tall challenge since the capital
city is a fairly young development. In order to extract a connection
to historical and cultural content, the circle had to be enlarged
to absorb the culture and expression of surrounding areas instead
of the capital itself.n

Top executives from the hotel
Mother's day Celebrated at and hospitability Industry
Pearl Continental Lahore
join Avari Hotel
The Pearl Continental (PC) hotel, in connection with the
Mother's Day, organised a ceremony at Marcopolo Restaurant.
A large number of families were present at the occasion. A cake
was also cut during the event, and later, a lucky draw was also
held especially for mothers. Shabina Riaz was the chief guest
of the event. She expressed her joy of being a mother and shared
her experiences. PC General Manager Irshad B Anjum also
spoke about the sanctity of motherhood and how a good mother
is the major force behind the success of a family.n
90

Madiha Mustafa Malik and Kazim Rizvi have joined the
Avari Hotel Lahore as new PR and Brand Coordinator, and
Director Sales and Marketing respectively. Madiha brings with
her varied experience of event coordination as she has worked
for different organisations and assisted them in arranging fashion
shows and other media events. Rizvi, on the other hand, started
his career in the hotel industry with Hilton in 1977. In 1989, he
undertook extensive training with Ramada Hotels in Washington
DC.n

Mr. Roeland Vos President of Starwood Hotels and Resorts,
Europe, Africa & Middle East (Eame), Mr. Guido De Wilde
Senior Vice President & Regional Director Starwood Hotels &
Resorts Middle East, Mr. Antoine Joignant Area Manager Pakistan
& General Manager Sheraton Karachi Hotel, accompanied the
Sheraton Karachi team for a visit to the village of Jati Angario.
This village was adopted by Sheraton Karachi under their flood
relief program; 'Give a Brick, Give a Break' for rehabilitation
and reconstruction after the devastation of 2010 floods. Mr
Roeland Vos stressed his support for the Pakistan Flood victims.
Starwood intends to adopt more villages for the same purpose
of rehabilitation in the coming months.n

Today the Asia travel industry
leads worldwide growth and travel
agents are faced with travelers who
want the best deal, and the latest
information at their fingertips;
throughout this ever-evolving
industry one core element has
remained constant and critical - Technology.
Since air travel began, technology has provided the solid
foundation on which travel agents build and develop their
businesses.Ê It is central to how they operate and communicate;
and with todays increasingly tech savvy travelers, it is the
number one priority that helps them gain a competitive
advantage. stated Mr Robert Bailey, President and CEO of
Abacus International. Globally, the travel industry is spending
billions of dollars on technology, and Asia accounts for about
a third of this.
Technologys brisk pace has propelled travel agents to
constantly reinvent and redefine their role and that of their
business. According to a new Abacus poll, 96.4 per cent of
agents polled were unanimous in their agreement that technology
has completely revolutionised the way they conduct their
business.
As Abacus International celebrates its 23rd year as the leading
provider of travel solutions and services in Asia, it looks at the
some of the travel technologies that it has helped pioneer in
assisting agents throughout the region gain a competitive foothold
in the travel space.n

DHL expands fleet in Pakistan
DHL, the world's leading Logistics Company, further expanded its domestic fleet in Pakistan by inducting more new trucks
in its existing fleet of vehicles. The strengthening of the fleet will help DHL Global Forwarding to provide efficient and timely
service to its customers in Pakistan.
A senior level delegation of DHL Global Forwarding lead by Ms. Anne Schaefer, Director Strategic Planning - South Asia
and Imran Shaikh, Managing Director, DHL Pakistan, recently visited Hinopak Motors Limited, Karachi. Speaking on the
occasion Ms. Anne Schaefer, Director Strategic Planning - South Asia said "We see a great and growing demand from our
customers for reliable and secure domestic transport solutions across the country. DHL differentiates itself through best-in class
quality standards in a developing market segment. We see ourselves in the driver-seat in collaboration with local partners to
expand and enhance the transportation infrastructure for companies operating in Pakistan.
The expansion of our fleet is one important aspect but our activities also include work on related issues like road safety."
Commenting on the expansion of DHL vehicle fleet, Imran Shaikh, Managing Director DHL Global Forwarding Pakistan said
"This induction marks the expansion of our domestic operations in Pakistan and we hope that the extended fleet will help us
to serve our customers well by providing timely and efficient services across Pakistan."
DHL Global Forwarding has a significant infrastructure and operational presence in every global market and provides
specific logistics solutions to meet the demanding needs of every industry. DHL is the logistics partners of the biggest FMCG
manufacturers and retailers in the country, pharmaceutical manufacturers and wholesalers, technology industry and also the
fashion industry. DHL is equipped to handle highly sensitive needs of oil refinery, like managing a drilling operation on or offshore, or mining, generating or distributing power.n

Dnata today unveiled a new company philosophy and fresh
visual branding after having undergone a global brand realignment
following a period of unprecedented growth worldwide.
Hundreds of employees from across the Group celebrated
dnata's revitalised look and feel, which include a striking new
logo, at a launch event held in Dubai . A new company vision,
mission and set of values have been created to encompass dnata's
diverse portfolio of businesses and unify over 20,000 employees
around the world. These will also act as a spring board for future
expansion including the launch of a corporate travel service in
India next month, capturing the essence of the company as a
global player.
The brand refresh comes during one of dnata's most successful
periods in its 52 year history, as the company has transitioned
from regional to global status. Over the past six years, the
organisation, which incorporates a range of services including
ground handling, cargo, travel, IT solutions and flight catering,
has quadrupled in size. It now has a global footprint across 73
airports, in 38 countries across five continents.
Despite the recent global economic downturn, dnata continues
to expand. The recent acquisition of Alpha Flight Limited, which
provides flight catering and retail services for over 100 airlines
worldwide, catapulted the company's international flight catering
business to its current position, now present at 62 airports in 12
countries. This significant milestone was complemented by the
2008 acquisitions of a 23% share in worldwide corporate travel
company, Hogg Robinson Group (HRG) and 49% of the global
outsource provider, Mind Pearl.
"Today is the beginning of a new era for dnata, our customers
and our staff," said Gary Chapman, President, dnata. "The
brand refresh represents the start of our journey as a global,
unified company. It has been an insightful and creative process
which will further enhance our customer offering through our
values of 'service excellence' and 'delighting customers'," he
added. Staff events celebrating the new brand integration will
also take place over the next few months in dnata offices across
the globe including Switzerland, the United Kingdom, Australia,
Singapore, the Philippines and Iraq.n

92

Byco, the fastest growing OMC in Pakistan, now has a strong
network of over 200 retail stations across the nation. The
celebratory event was held at Carlton Hotel, Karachi. Mr. Amir
Abbassciy, CEO Byco Petroleum and Mr. Kalim Siddiqui,
President Byco Petroleum, congratulated all the employees on
this remarkable achievement and encouraged the team to continue
working with the same zeal and dedication. Byco has achieved
this milestone in a short span of time
The event also marked the launch of Byco's newly-branded
tank lorries. These state-of-the-art vehicles, with enhanced safety
and security measures now ply on the roads across the nation.n

Air Marshal (Retd) Khalid
Choudhry new CAA DG
Air Marshal (Retd) Khalid
Choudhry assumed charge of
Civil Aviation Authority Director
General.
Choudhry earned his Wings
from PAF Academy, Risalpur in
April 1974. His aviation career
includes more than 3,500 flying
hours, primarily on fighter
assignments.
For his meritorious services,
the Government of Pakistan
conferred on him the Hilal in
Order of Imtiaz (Military) and Tamgha-e-Basalatn

www.iandm.pk

Vol: XXXXIV

COMPANY NEWS

Oman Air Wins Best Extra Flights offered
Business Class Seat by Thai Air
At World Airline
Awards

Oman Air was named winner of
the World's Best Business Class
Airline Seat award at the 2011
World Airline Awards, in a
ceremony held in the French Air
and Space Museum at the Paris
Air Show.

Turkish Airlines
named winner of
"Best Premium
Economy Seats"
and "Best Airline
Southern Europe"
Turkish Airlines has been named
as the winner of the categories,
"Best Premium Economy Seats"
and "Best Airline Southern
Europe" by Skytrax, says a press
release. Turkish Airlines has been
chosen as the winner of the three
categories by Skytrax which is a
world recognised brand associated
with air travel excellence in the
21st century, providing unique
expertise to the world airline and
airport industry.
Vol: XXXXIV

For the convenience of their valued
clients, Thai Airways has added
extra flights to its schedule from
Karachi, Lahore & Islamabad. The
new flight program is effective
from 11th June till 6th August.

SriLankan Airlines
bags four awards
State-run Sri Lankan Airlines has
bagged four awards at Sri Lanka
Tourism Authority awards, the
airline said.
It was named 'airline of the year
2010' for its contribution to
inbound tourism traffic, the award
for promoting inbound tourism
and best print media presentation
inflight magazine.
It was also named to the 'hall of
fame' for its continued
contribution to the travel industry,
especially after winning the 'airline
of the year' for three years running.

The TCS Case Study appears prominently
in 'Principles of Marketing - South Asian
Perspective'
The 13th edition of the Principles of Marketing, the seminal work of Professor
Dr. Philip Kotler, is dedicated to the South Asian Perspective. Through the decades
Kotler's work has held the fort as the primary text on marketing for business
schools all over the world. In the 13th edition Kotler has shared the credits in
equal measure with co-authors Professor Dr. Gary Armstrong (University of North
Carolina), Professor Dr. Prafulla Y. Agnihotri (Indian Institute of Management,
Calcutta), and Professor Dr. Ehsan ul Haque (Lahore University of Management
Sciences, Lahore).
The TCS Case Study appears prominently as the curtain-raiser of Chapter 12
titled 'Marketing Channels - Delivering Customer Value' on page 288. A special
reference is also made to the TCS website www.sentimentsexpress.com
<http://www.sentimentsexpress.com> in Chapter 17 that deals with Direct and
Online Marketing on page 431. The TCS Story is narrated in great detail, and in
crisp and clear terms, and presents TCS as an agile and innovative company "Â&#x2026;
that has dramatically changed the distribution choices and expectations of both
business and home consumers forever."
This is high order validation for TCS from Kotler & Co, if any validation was
needed after the conduct and publication in 2005 of the Harvard Business School's
Case Study on TCS. n

Dnata today unveiled a new company philosophy and fresh
visual branding after having undergone a global brand realignment
following a period of unprecedented growth worldwide.
Hundreds of employees from across the Group celebrated
dnata's revitalised look and feel, which include a striking new
logo, at a launch event held in Dubai . A new company vision,
mission and set of values have been created to encompass dnata's
diverse portfolio of businesses and unify over 20,000 employees
around the world. These will also act as a spring board for future
expansion including the launch of a corporate travel service in
India next month, capturing the essence of the company as a
global player.
The brand refresh comes during one of dnata's most successful
periods in its 52 year history, as the company has transitioned
from regional to global status. Over the past six years, the
organisation, which incorporates a range of services including
ground handling, cargo, travel, IT solutions and flight catering,
has quadrupled in size. It now has a global footprint across 73
airports, in 38 countries across five continents.
Despite the recent global economic downturn, dnata continues
to expand. The recent acquisition of Alpha Flight Limited, which
provides flight catering and retail services for over 100 airlines
worldwide, catapulted the company's international flight catering
business to its current position, now present at 62 airports in 12
countries. This significant milestone was complemented by the
2008 acquisitions of a 23% share in worldwide corporate travel
company, Hogg Robinson Group (HRG) and 49% of the global
outsource provider, Mind Pearl.
"Today is the beginning of a new era for dnata, our customers
and our staff," said Gary Chapman, President, dnata. "The
brand refresh represents the start of our journey as a global,
unified company. It has been an insightful and creative process
which will further enhance our customer offering through our
values of 'service excellence' and 'delighting customers'," he
added. Staff events celebrating the new brand integration will
also take place over the next few months in dnata offices across
the globe including Switzerland, the United Kingdom, Australia,
Singapore, the Philippines and Iraq.n

46

Byco, the fastest growing OMC in Pakistan, now has a strong
network of over 200 retail stations across the nation. The
celebratory event was held at Carlton Hotel, Karachi. Mr. Amir
Abbassciy, CEO Byco Petroleum and Mr. Kalim Siddiqui,
President Byco Petroleum, congratulated all the employees on
this remarkable achievement and encouraged the team to continue
working with the same zeal and dedication. Byco has achieved
this milestone in a short span of time
The event also marked the launch of Byco's newly-branded
tank lorries. These state-of-the-art vehicles, with enhanced safety
and security measures now ply on the roads across the nation.n

Air Marshal (Retd) Khalid
Choudhry new CAA DG
Air Marshal (Retd) Khalid
Choudhry assumed charge of
Civil Aviation Authority Director
General.
Choudhry earned his Wings
from PAF Academy, Risalpur in
April 1974. His aviation career
includes more than 3,500 flying
hours, primarily on fighter
assignments.
For his meritorious services,
the Government of Pakistan
conferred on him the Hilal in
Order of Imtiaz (Military) and Tamgha-e-Basalatn

Air Arabia , the first and largest lowcost carrier (LCC) in the Middle East and
North Africa , has confirmed that it has
won the A320 Family Operational
Excellence Award by Airbus for the year
2009-2010.
The Sharjah-based LCC received the
award for achieving the highest level of
A320 family aircraft utilization in the
world for a fleet of less than 30 aircraft,
with 99.8 per cent operational reliability.
Air Arabia received the prestigious
award in Toronto , Canada , during Airbus's
biannual symposium of all operators of
the A320 Family worldwide.
Held earlier from May 23 through 26,
this year's symposium marks the fifth
consecutive occasion Air Arabia has won
the award.
This symposium reaffirmed the
company's lead among all global airlines
operating the Airbus A320 family
aircraft.n
94

The adoption of new technologies is
boosting the cruise industry's bottom line,
according to a new study from Amadeus
and the Cruise Lines International
Association (CLIA). The new study
examines the impact of social media on the
cruise industry and suggests that social
media is making waves for agents and cruise
lines. From 'Likes' to 'Leads': Cruise Agents,
Social Media & the Impact of Emerging Technologies surveyed representatives at
cruise lines as well as more than 1,000 cruise specialists, inquiring about their current
engagement with social technologies. The study, which was prepared by the independent
research firm Schwartz Consulting Partners, also asked respondents to make predictions
about their future engagement with social media.n

Etihad and Gerry's International team up
to launch new coach service
Etihad Airways, has teamed up with Gerry's International, one of Pakistan's leading
aviation groups, will launch a dedicated coach service in Pakistan from May 02, 2011
for Etihad guests travelling between Allama Iqbal International Airport in Lahore and
the cities of Sialkot and Faisalabad.
The new daily service will be provided by two 16-seat luxury coaches and the
coach operating schedule will be coordinated with the arrival and departure timings
of the Etihad Airways flights at Lahore's Allama Iqbal International Airport.
Guests wishing to inquire or book with 'Etihad Coach Services' to and from Sialkot
can contact Gerry's International on the following number +92-52-427-3402. Guests
travelling to and from Faisalabad can call +92-41-263-5457 or alternatively get in
touch via e-mail at etihadcoach@gerrys.com.pk.n

Flydubai, GE unit sign $300m engine repair
deal
Flydubai, Dubai's first low-cost carrier,
on recently announced a $300 million contract
with GE Aviation for the maintenance, repair
and overhaul of 109 engines over the next
10 years. The contract with GE Aviation,
which was signed at the Paris Air Show,
represents an investment of $2 million per
CFM56-7B engine that powers flydubai's
fleet of Boeing 737-800 NG aircraft, the airline said.
"Flydubai is constantly looking for the best services and partners to ensure our
fleet remains in the best condition to safeguard our operational obligations and safety
of our passengers and crew. We have one of the newest fleets in the industry and
signing this agreement will ensure our engines continue to perform at peak levels,"
Ghaith Al Ghaith, chief executive of flydubai, saidn